Audio Visual Presentation: GB518: Financial Accounting Principles and Analysis

Continuing Cookie Chronicle 1

Continuing Cookie Chronicle

(Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 7.)

CCC8- Credit Policy ( (Use this as the Level One heading in the Case Assignments)

One of Natalie’s friends, Curtis Lesperance, runs a coffee shop where he sells specialty coffees and prepares and sells muffins and cookies. He is eager to buy one of Natalie’s fine European mixers, which would enable him to make larger batches of muffins and cookies. However, Curtis cannot afford to pay for the mixer for at least 30 days. He asks Natalie if she would be willing to sell him the mixer on credit.

Natalie comes to you for advice and asks the following questions.

1. “Curtis has provided me with a set of his most recent financial statements. What calculations should I do with the data from these statements, and how will the results help me decide if I should extend credit to Curtis?”

2. “Is there an alternative other than extending credit to Curtis for 30 days?”

3. “I am thinking seriously about permitting my customers to use credit cards. What are some of the advantages and disadvantages of letting my customers pay by credit card?”

Instructions

(a) Answer Natalie’s questions. Create 3 BRIEF subheadings using the 3 questions.