SunsTruck Partnered Discount Retail Store – For the last six months, SunsTruck has partnered with the discount retail store to run a pop-up sunglasses stand in their stores for a big summer promotion. Due to the high customer purchase rate, the store has requested stock for five additional stores. SunsTruck needs to increase its capacity to meet the additional demand. In order to do so, SunsTruck needs additional money.
In this assignment, you will need to help determine which type of financing option is best for your company and train your junior accountants on the accounting cycle and financial statements.
Step 1: Financing
The junior accounting team has assembled a Financing Report that (a) offers three options for securing the additional funds required to meet the new order; and (b) details the criteria Shaun, the owner of SunsTruck, would like you to consider when choosing one of the options. Based on this report:
- Identify which financing option you think is the best option for SunsTruck to pursue given Shaun’s constraints. Explain the rationale for your decision.
Note: You should complete Steps 2,3 & 4 after reading the material in Week 5.
Step 2: Accounting Cycle
A junior accountant is working to get everything in order for the new financing and has come to you with a question about what do next in the accounting cycle.
- Read the email the junior accountant sent you and identify the best next step to take in the accounting cycle. Explain your reasoning.
Step 3: Financial Statements
A potential investor has been identified, but before it is willing to commit, it has requested information about SunsTruck’s current debt from the junior accountants.
- Identify the correct financial statement for your junior accountants that will provide the investor with the information it has requested. Explain to your junior accountants why you are giving them this financial statement and where the debt information is located.
Step 4: Financial Analysis
If you were the type of financier selected in Step 1, would you invest in SunsTruck? Explain the rationale for your decision.