keep in mind the following internal benchmarks and bank covenants:

1.Current Ratio must remain above 2.5x at month end

2.Minimum Cash Balance must be above $10,000 at month end

Explain the reasoning behind each choice made :

1; A supplier has sent an email proposing the following deal to you:

1A: To buy the usual 500 units on account for $1,250; or

1B: To buy the usual 500 units but with cash and receive a 20% discount

Select one: A or B

2: The Company has the opportunity to make a huge (and rare) sale:

2A: To sell the unit for $10,000 but the customer wants to pay only 20% cash and the remaining 80% on account; or

2B: To sell the unit for $5,000 cash

Note: The inventory had cost the Company $1,250.

Select one: A or B

3: A repeat VIP customer has approached the Company requesting an express order:

3A: The Company's supplier will only rush the order with a 30% markup paid in full with cash. This will cost the Company $15,000 and the customer cannot pay until next month when the unit is delivered (note: revenue criteria not met until delivered). They are offering $50,000 cash for all the trouble; or

3B: Kindly reject the VIP customer's offer risking the business relationship altogether.

Select one: A or B

4:A replacement part for an employee's laptop was purchased for $1,200 cash. This is expected to extend the useful life of the laptop by an additional 3 years. You are conflicted by your coworkers' opinions but must choose one of the following:

4A: To agree with Bob who believes this purchase is an asset as it extends the life of the laptop

4B: To agree with Amy who believes its an expense as the amount is nominal

Select one: A or B

5:An invoice was received for repair work done last week costing $3,500:

5A: To pay the invoice within 3 days of receipt taking advantage of the 2% discount available

5B: To delay payment of the invoice until next month, when due, however, no discount will be applied

Select one: A or B

Prepare journal entries for each question.

DEF Co. Balance Sheet DRAFT: Assets Current assets Cash Accounts receivable Inventory Prepaid insurance Total Current Assets ENTER --> Balance 31-May CLOSED $ 15,201 $ 2,102 $ 1,021 $ 1,500 s 19.824 $ 301 Non-Current Assets Long-Term Investments Property, plant, and equipment Land Buildings Less: Accumulated depreciationbuildings Equipment Less: Accumulated depreciation equipment Total Non-Current Assets $ $ $ 175,000 50,102 10,301 5,201 1,201 219,102 $ S TOTAL ASSETS S 238,926 Liabilities and Owner's Equity Current liabilities Accounts payable Salaries payable Total Current Liabilities $ $ S 5,000 1,301 6,301 Non-Current Liabilities Mortgage payable Non-Current Liabilities $ S 125,000 125,000 Owner's Equity Owner, Capital Total Owner's Equity $ S 107,625 107,625 TOTAL LIABILITIES & OWNER'S EQUITY S 238,926 DEF Co. Income Statement DRAFT: CLOSED Month ending 31-May Sales revenue Sales revenue $ 25,000 Cost of goods sold $ 7,500 GROSS PROFIT S 17,500 Operating expenses Administrative General Depreciation Expense Insurance Expense Repairs & Maintenance Salaries & Wages Total Operating Expenses $ $ $ $ $ 400 259 1,050 7,000 3,500 12,209 PROFIT S 5,291