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    11-1 Medieval Adventures Company

    Uploaded by

    Wei Dai
    The documents show monthly balance sheets and income statements for the Medieval Adventure Company over a 13 month period, demonstrating that the company initially struggled with negative retained earnings but grew sales and profits each month until being able to take out and eventually repay bank loans to manage cash flow needs as accounts receivable payments lagged costs by 2 months.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd

    11-1 Medieval Adventures Company

    Uploaded by

    Wei Dai
    474 views8 pages
    The documents show monthly balance sheets and income statements for the Medieval Adventure Company over a 13 month period, demonstrating that the company initially struggled with negative retained earnings but grew sales and profits each month until being able to take out and eventually repay bank loans to manage cash flow needs as accounts receivable payments lagged costs by 2 months.

    Original Description:

    Medieval Adventures Company

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    The documents show monthly balance sheets and income statements for the Medieval Adventure Company over a 13 month period, demonstrating that the company initially struggled with negative retained earnings but grew sales and profits each month until being able to take out and eventually repay bank loans to manage cash flow needs as accounts receivable payments lagged costs by 2 months.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    474 views8 pages

    11-1 Medieval Adventures Company

    Uploaded by

    Wei Dai
    The documents show monthly balance sheets and income statements for the Medieval Adventure Company over a 13 month period, demonstrating that the company initially struggled with negative retained earnings but grew sales and profits each month until being able to take out and eventually repay bank loans to manage cash flow needs as accounts receivable payments lagged costs by 2 months.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 8

    Medieval Adventure Company

    Balance Sheet
    As of December 31
    Assets Equities
    Cash 146,250 Common Stock 250,000
    Accounts Receivable 68,750 Retained Earnings -
    Inventory 35,000

    250,000 250,000

    Medieval Adventure Company


    Balance Sheet
    As of January 31
    Assets Equities
    Cash 111,250 Common Stock 250,000
    Accounts Receivable 96,250 Retained Earnings 10,000
    Inventory 52,500

    260,000 260,000

    Medieval Adventure Company


    Balance Sheet
    As of February 28
    Assets Equities
    Cash 72,500 Common Stock 250,000
    Accounts Receivable 137,500 Retained Earnings 30,000
    Inventory 70,000

    280,000 280,000

    Medieval Adventure Company


    Balance Sheet
    As of March 31
    Assets Equities
    Cash 30,000 Common Stock 250,000
    Accounts Receivable 192,500 Retained Earnings 60,000
    Inventory 87,500

    310,000 310,000

    Medieval Adventure Company


    Balance Sheet
    As of April 30
    Assets Equities
    Cash - Common Stock 250,000
    Accounts Receivable 247,500 Retained Earnings 100,000
    Inventory 105,000
    Bank Loan 2,500
    352,500 352,500

    Medieval Adventure Company


    Balance Sheet
    As of May 31
    Assets Equities
    Cash - Common Stock 250,000
    Accounts Receivable 302,500 Retained Earnings 150,000
    Inventory 122,500
    Bank Loan 25,000
    425,000 425,000

    Medieval Adventure Company


    Balance Sheet
    As of June 30
    Assets Equities
    Cash - Common Stock 250,000
    Accounts Receivable 357,500 Retained Earnings 210,000
    Inventory 140,000
    Bank Loan 37,500
    497,500 497,500

    Medieval Adventure Company


    Balance Sheet
    As of July 31
    Assets Equities
    Cash - Common Stock 250,000
    Accounts Receivable 412,500 Retained Earnings 280,000
    Inventory 157,500
    Bank Loan 40,000
    570,000 570,000
    Medieval Adventure Company
    Income Statement
    As of January 31
    Units 1,000
    Sales Revenue 55,000

    Variable Costs (1,000 units) 35,000


    Fixed Costs (Feb) 10,000

    Net Income 10,000

    Medieval Adventure Company


    Income Statement
    As of 28 February
    Units 1,500
    Sales Revenue 82,500

    Variable Costs (1,000 units) 52,500


    Fixed Costs 10,000

    Net Income 20,000

    Medieval Adventure Company


    Income Statement
    As of 31 March
    Units 2,000
    Sales Revenue 110,000

    Variable Costs (1,000 units) 70,000


    Fixed Costs 10,000

    Net Income 30,000

    Medieval Adventure Company


    Income Statement
    As of 30 April
    Units 2,500
    Sales Revenue 137,500

    Variable Costs (1,000 units) 87,500


    Fixed Costs 10,000

    Net Income 40,000


    Medieval Adventure Company
    Income Statement
    As of 31 May
    Units 3,000
    Sales Revenue 165,000

    Variable Costs (1,000 units) 105,000


    Fixed Costs 10,000

    Net Income 50,000

    Medieval Adventure Company


    Income Statement
    As of 30 June
    Units 3,500
    Sales Revenue 192,500

    Variable Costs (1,000 units) 122,500


    Fixed Costs 10,000

    Net Income 60,000

    Medieval Adventure Company


    Income Statement
    As of 31 July
    Units 4,000
    Sales Revenue 220,000

    Variable Costs (1,000 units) 140,000


    Fixed Costs 10,000

    Net Income 70,000

    Medieval Adventure Company


    Income Statement
    As of 31 Aug
    Units 4,500
    Sales Revenue 247,500

    Variable Costs (1,000 units) 157,500


    Fixed Costs 10,000

    Net Income 80,000

    Medieval Adventure Company


    Income Statement
    As of 30 Sep
    Units 5,000
    Sales Revenue 275,000

    Variable Costs (1,000 units) 175,000


    Fixed Costs 10,000

    Net Income 90,000


    Nov Dec Jan Feb Mar Apr May
    Units 500 750 1,000 1,500 2,000 2,500 3,000
    Cash 146,250 111,250 72,500 30,000 -
    Collections 27,500 41,250 55,000 82,500 110,000
    Bank Loan 2,500 22,500
    173,750 152,500 127,500 115,000 132,500

    Costs 62,500 80,000 97,500 115,000 132,500


    Variable 52,500 70,000 87,500 105,000 122,500
    Fixed 10,000 10,000 10,000 10,000 10,000
    Loans Paid
    Cash (End) 111,250 72,500 30,000 - -

    Start taking
    loan (Total
    $40,000) in
    April

    Why did this happen?


    Credit sales payment terms (2 months)
    Costs were growing faster than cash received (2 months late)

    - #REF! #REF! #REF!


    #REF! #REF! #REF! #REF!

    -
    Jun Jul Aug Sep Oct Nov Dec
    3,500 4,000 4,500 5,000 5,500 6,000 6,500 7000
    - - - - - 12,500 50,000
    137,500 165,000 192,500 220,000 247,500 275,000 302,500
    12,500 2500
    150,000 167,500 192,500 220,000 247,500 287,500 352,500

    150,000 167,500 192,500 220,000 235,000 237,500 255,000


    140,000 157,500 175,000 192,500 210,000 227,500 245,000
    10,000 10,000 10,000 10,000 10,000 10,000 10000
    7,500 17,500 15,000
    - - - - 12,500 50,000 97,500

    Loan can be
    fully repaid
    in October

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