CASE ANALYSIS

Case Analysis: The Garden Place

Table of Contents

Introduction to Case3

Part 1- Questions Related to Case3

Journal Entries for Items3

T-Accounts for Items7

Projected Balance Sheet9

Projected Income Statement10

Additional Information Required11

Annual Breakeven Point in Sales Dollars for the Garden Place11

Part 2- Analysis based on Findings12

Conclusion and Recommendations15

References16

Exhibits18

Case Analysis: The Garden Place

Introduction to Case

This case is about a presentation to senior management on a business called “the green place”, which is a new retail garden store. This report suggests Mary Jane Bowers on what initiatives she needs to take in order to flourish her business.

Part 1- Questions Related to Case

Journal Entries for Items

Accounts Affected:

Assets - Cash is decreased

Shareholder's Equity - Common Stock is increased.

The journal entry is:

Cash 75,000

Common Stock 75,000

Accounts Affected:

Assets (Cash received in Loans) - increased

Liabilities (Interest Expense: $32,000*0.13) - decreased

The journal entry is:

Cash $32,000

Interest $32,000

Accounts Affected:

Assets (Loan received from bank) - increased

Liabilities (Cash in Interest paid) - decreased

The journal entry is:

Cash in Loan received $10,000

Interest paid $10,000

Accounts Affected:

Assets (equipment purchased) - Increased

Assets (revenues paid to acquire equipment) - Decreased

The journal entry is:

Equipment $6,000

Cash $6,000

Accounts Affected:

Assets- increased

Revenues- decreased

The journal entry is:

Rototiller $400

Cash $400

Accounts Affected:

Assets (purchase of cash register) - increased

Cash- decreased

The journal entry is:

Cash Register- $3,600

Cash $3,600

Accounts Affected:

Assets- increased

Cash- decreased

The journal entry is:

Inventory- $60,000

Cash- $60,000

Accounts Affected:

Liabilities- decreased

Assets- increased

The journal entry is:

Sales amount received- $40,000

Assets- decreased (merchandise sold to customers) - $40,000

Accounts Affected:

Cash -decreased

Purchased Assets- increased

The journal entry is:

Purchases- $200,000

Cash- $200,000

Accounts Affected:

Expense- Increased

Cash- decreased

The journal entry is:

Advertising- $20,000

Cash- $20,000

Accounts Affected:

Expense Liabilities- increased

Assets cash-decreased

The journal entry is:

Expense Paid- $200,000

Cash for payment- $200,000

Accounts Affected:

Liabilities - Accounts Payable is decreased

Assets - Cash is decreased

The journal entry is:

Accounts Payable- $336

Cash- $336

Accounts Affected:

Liabilities- decreased

Assets in Cash- Decreased

The journal entry is:

Accounts Payable- $1, 25, 200

Cash- $1, 25, 200

T-Accounts for Items

Entry

Debit

Credit

Cash

Common Stock

60,000

60,000

Cash

Interest

$32,000

$32,000

Cash

Interest

$10,000

$10,000

Equipment

Cash

$6,000

$6,000

Rototiller

Cash

$400

$400

Cash Register

Cash

$3,600

$3,600

Inventory

Cash

$60,000

$60,000

Sales

Cash

$40,000

$40,000

Purchases

Cash

$200,000

$200,000

Advertising

Cash

$20,000

$20,000

Expenses

Cash

$200,000

$200,000

Accounts Payable

Cash

$336

$336

Accounts Payable

Cash

$1, 25, 200

$1, 25, 200

Projected Balance Sheet

The Garden Place

Projected Balance Sheet

Date: 03/31/2006

Assets

2006

Current Assets

 

Cash

2,557,536

Total current assets

2,557,536

Fixed (Long-Term) Assets

Property, plant, and equipment

270,000

Total fixed assets

270,000

Other Assets

Total Other Assets

-

Total Assets

2,827,536

Liabilities and Owner's Equity

Current Liabilities

Accounts payable

1,35,536

Total current liabilities

1,35,536

Long-Term Liabilities

Total long-term liabilities

2,61,700

Owner's Equity

Owner's investment

75,000

Total owner's equity

75,000

Total Liabilities and Owner's Equity

2,827,536

Projected Income Statement

The Garden Place

Projected Income Statement Template

For March 31, 2006

Sales revenues

Cash sales

340, 000

Sales on Account

60,000

Total sales revenues

400, 000

Cost of goods sold and services provided

 --

Gross profit

400, 000

Operating expenses

Salaries

112,000

Rent

7,200

Utilities

4,800

Advertising

20,000

Depreciation

- --

Insurance

 ---

Supplies

 ---

Interest

46,160

Telephone

1,200

Total operating expenses

191,360

Income from operations

208,640

Corporate income tax

 ---

Net income

208,640

Additional Information Required

There were various heads in the projected balance sheet and income statements that could have led to an authentic reporting for the company's projections. A couple of heads were missing from the calculations, which might not have resulted in a correct projection for the coming years. In case of a balance sheet, the available data did not talk about various terms in long-term debt nor did it tell anything about retained earnings for the company (Pendlebury, Groves, 2001, Pp. 24-30). Hence, our projected balance sheet is a tentative form of the projections for Garden Place. The missing parts of income statement, particularly the cost of goods sold and the income tax amount was missing from the available data.

Annual Breakeven Point in Sales Dollars for the Garden Place

The ...