Sickofacc
Feb 16th, 2012, 01:43 PM
Hi guys... I needed some help on an accounting case, and I figured someone here would be able to help me... I was also thinking this could be a thread where other students come for accounting case help (as I am sure we all have needed it one time or another)...
I just want to make sure I am on the right track with this one. Please let me know how you would answer this case. No sample statements required by me. We are to assume the banker as been given all the info. We need to decide to approve the loan or not (acting as the banker), and explain why or why not. If we need more information to make a decision, state that and say way.... These were basically the instructions. Any help would be much appreciated.
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Wing Jammer Inc. (WJI) was incorporated in 2003 by its sole shareholder, Jie Whaler. WJI operates a yacht that provides tours of Toronto Harbour. The yacht can also be rented by private groups on a per hour basis. During September 2003, its first month of operations, the following transactions and events occured.
September 1: WJI was incorporated and Jie Whaler contributed $275,000 cash in exchange for 100 common shares of the company.
September 2: Purchased a yacht, the Wind Jammer XL, for $300,000, paying $200,000 in cash and the remainder as a loan payable to the seller of the boat. interest on the loan is 12%, due monthly starting September 30, 2003. The loan must be repaid in full on August 31, 2006.
September 2: The seller has agreed to rent a docking space to WJI for $300 per month. WJI paid $1500 for docking rights up to the end of January 2004.
September 3: Insurance is arranged. The monthly premium of $370 is payable on the 15th of each month, and the first payment is made on September 15, 2003.
September 4: WJI paid $4500 for lumber and supplies to construct a booth for selling tickets at the dock. Leftover lumber worth about $2000 was taken to Jie Whaler's home in Oakville to be used to build a deck.
September 4: WJI purchased $1650 worth of fuel, and life jackets and other safety supplies worth $1900, all on credit.
September 15: WJI received a deposit of $3000 from a customer, who wants to rent the boat for a company party on October 2, 2003. The full price of the rental wil be $6000.
September 1-30: Sales for the month were:
-Rental paid in cash = $5600
-Rentals on credit (stil outstanding September 30th)= $970
-Tour tickets paid for in cash - $8800. $550 worth of the tour tickets were unused as of the end of September.
September 30th: WJI paid $8000 to Jie Whaler as a salary, and $4600 to employees for the month's wages.
Additional Information:
-About half of the fuel is remaining at the end of September.
-A lawyers bill for $1100 for incorporating the company is received on October 2nd.
REQUIRED:
Assume the role of a banker. WJI applies to your bank for a $100,000 loan on October 4, 2003. Which financial statements would you request from WJI, and why? Would you approve the loan? Explain the information you use and the reasons for your decision.
I just want to make sure I am on the right track with this one. Please let me know how you would answer this case. No sample statements required by me. We are to assume the banker as been given all the info. We need to decide to approve the loan or not (acting as the banker), and explain why or why not. If we need more information to make a decision, state that and say way.... These were basically the instructions. Any help would be much appreciated.
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Wing Jammer Inc. (WJI) was incorporated in 2003 by its sole shareholder, Jie Whaler. WJI operates a yacht that provides tours of Toronto Harbour. The yacht can also be rented by private groups on a per hour basis. During September 2003, its first month of operations, the following transactions and events occured.
September 1: WJI was incorporated and Jie Whaler contributed $275,000 cash in exchange for 100 common shares of the company.
September 2: Purchased a yacht, the Wind Jammer XL, for $300,000, paying $200,000 in cash and the remainder as a loan payable to the seller of the boat. interest on the loan is 12%, due monthly starting September 30, 2003. The loan must be repaid in full on August 31, 2006.
September 2: The seller has agreed to rent a docking space to WJI for $300 per month. WJI paid $1500 for docking rights up to the end of January 2004.
September 3: Insurance is arranged. The monthly premium of $370 is payable on the 15th of each month, and the first payment is made on September 15, 2003.
September 4: WJI paid $4500 for lumber and supplies to construct a booth for selling tickets at the dock. Leftover lumber worth about $2000 was taken to Jie Whaler's home in Oakville to be used to build a deck.
September 4: WJI purchased $1650 worth of fuel, and life jackets and other safety supplies worth $1900, all on credit.
September 15: WJI received a deposit of $3000 from a customer, who wants to rent the boat for a company party on October 2, 2003. The full price of the rental wil be $6000.
September 1-30: Sales for the month were:
-Rental paid in cash = $5600
-Rentals on credit (stil outstanding September 30th)= $970
-Tour tickets paid for in cash - $8800. $550 worth of the tour tickets were unused as of the end of September.
September 30th: WJI paid $8000 to Jie Whaler as a salary, and $4600 to employees for the month's wages.
Additional Information:
-About half of the fuel is remaining at the end of September.
-A lawyers bill for $1100 for incorporating the company is received on October 2nd.
REQUIRED:
Assume the role of a banker. WJI applies to your bank for a $100,000 loan on October 4, 2003. Which financial statements would you request from WJI, and why? Would you approve the loan? Explain the information you use and the reasons for your decision.