susquehanna equipment rentals
a 100.0% COMPREHENSIVE PROBLEM 1 SUSQUEHANNA EQUIPMENT RENTALS (concluded) It does not appear that the company faces any immediate solvency probiems. It did start with S200,000 cash, but in its first transaction the company spent $140,000 on equipment, leaving only $60,000 cash to begin operations. This amount had increased to $65,000 by the end of December. Thus, during its first month of operations, the business was able to generate S5,000 of positive cash flow from operations. The $100,000 note payable due on November 30, 2012, does raise a potential concern about the company's solvency, however. Currently, the business does not have sufficient liquid assets to satisfy this obligation. In fact, the company's working capital position is actually negative by $25,880 (593.100 of current assets minus $118,980 of current liabilities) Likewise, its current ratio is only Q.78:1 (593,100 of current assets divided by $118,980 of current liabilities). However, if the business can continue to generate at least $5.000 of positive operating cash flows each month, remaining solvent should not pose a serious issue. & There is nothing at all unethical about Patty Driver (a founding stockholder) maintaining the accounting records for Susquehanna Equipment Rentals. In most businesses, the accounting records are maintained either by owners or employees, none of whom are "independent" of the organization. The concept of independence refers to auditing financial statements, where the auditor has to make an independent evaluation of the statements' fairness." Independence does not to the routine maintenance of accounting records apply a 100.0% COMPREHENSIVE PROBLEM 1 SUSQUEHANNA EQUIPMENT RENTALS (concluded) It does not appear that the company faces any immediate solvency probiems. It did start with S200,000 cash, but in its first transaction the company spent $140,000 on equipment, leaving only $60,000 cash to begin operations. This amount had increased to $65,000 by the end of December. Thus, during its first month of operations, the business was able to generate S5,000 of positive cash flow from operations. The $100,000 note payable due on November 30, 2012, does raise a potential concern about the company's solvency, however. Currently, the business does not have sufficient liquid assets to satisfy this obligation. In fact, the company's working capital position is actually negative by $25,880 (593.100 of current assets minus $118,980 of current liabilities) Likewise, its current ratio is only Q.78:1 (593,100 of current assets divided by $118,980 of current liabilities). However, if the business can continue to generate at least $5.000 of positive operating cash flows each month, remaining solvent should not pose a serious issue. & There is nothing at all unethical about Patty Driver (a founding stockholder) maintaining the accounting records for Susquehanna Equipment Rentals. In most businesses, the accounting records are maintained either by owners or employees, none of whom are "independent" of the organization. The concept of independence refers to auditing financial statements, where the auditor has to make an independent evaluation of the statements' fairness." Independence does not to the routine maintenance of accounting records apply
