As the owner of Telo, a startup business, you are struggling to generate enough gross profit to compete with Creft and Wozz. Also, your business frequently runs low on cash. To help determine how to fix these issues, you review the following Tableau Dashboard.

TELO YELLOW $85,000

TELO GREEN Cost of Goods sold: $60,000

TELO PURPLE Sales discounts: $6,000

TELO PINK Sales returns & allowances: $15,000

Creft Yellow Sales: $78,000

Creft Green Cost of goods sold: $56,000

Creft Purple Sales discounts: $5,000

Creft Pink Sales returns & allowances: $3,000

Wooz Yellow Sales: $82,000

Wooz Green Cost of gooods sold: $58,000

Wooz Purple Sales discounts: $4,000

Wooz Pink Sales Returns & allowances: $2,000

Supplies Purple 3,000

Land Yellow 12,000

Account Receivable Orange 8,000

Buildings Red 24,000

Cash Blue 2,000

Inventory Green 5,000

Telo Green Credit Period from Suppliers: 30 days

Telo Red Credit Period Given to Customers: 75 days

Creft Green Credit Period from Suppliers: 35 days

Creft Red Credit Period Given to Customers: 45 days

Woz Green Credit Period from Suppliers: 40 days

Woz Red Credit Given to Customers: 50 days

Retained Earnings Yellow Retained Earnings: $6,000

Wages payable Dark Blue Wages payable: $2,000

Notes payable Light Blue Notes payable (Due in 5 years): $31,000

Common Stock GREEN: $10,000

Accounts payable Orange: $5,000

Creft Orange Creft return policy 15 days

Telo Red return policy 60 days

Wozz Green return policy 10 days

1. Prepare Telo’s classified balance sheet as of December 31.
2. Which of following actions would increase the amount of cash available to Telo?
3. Which one of the following actions would most likely reduce sales returns and allowances?

Options for the left side table Current Assets, Liabilities and Equity

• Accounts payable
• Accounts receivable
• Buildings, net
• Cash
• Common stock
• Dividends
• Inventory
• Land
• Notes payable
• Retained earnings
• Supplies
• Wages payable

Options for the last table

• Advertising campaign to increase sales.
• Negotiating better credit terms with suppliers.
• Restricting the return policy from 60 days to 15 days.
• Switching to a lower cost and lower quality supplier.
   
   
   
   
   
   
   

Sales Sales discounts Sales returns & allowances Cost of goods sold Sales Sales discounts Sales returns & allowances Cost of goods sold Sales Sales discounts Sales returns & allowances Cost of goods sold $0 $20,000 $40,000 $60,000 $100,000 Telo Sales and Costs for Competing Companies Creft Wozz