Lisa Duncan Case

Lisa Duncan Case

Executive Summary

Lisa’s one-month job at the club allows her to earn $325 a week. She will also retain income that accrues from lessons. However, Lisa must choose between Waitress’s and Tennis Club’s jobs before signing a long-term contract. Regarding income, the Tennis club job is more rewarding than the waitress’s job. However, there are numerous factors that she has to consider before settling on one of the jobs on offer. The factors include hourly rates, job security, and experience and expertise.

Effect and Balances of Transaction

Opening an account and depositing $950 reduces cash at hand and increases bank balance. The cash account is credited $950, while the bank account is debited $950. The cash account was reduced by $950, while the bank account increased by $950.

Paying $300 for tennis supplies is a transaction that affects two accounts: cash account and Equipment account. The cash account will reduce by $300 while the company’s tennis equipment account or simply asset account will increase by $300 in the name of tennis supplies. The tennis supplies account is debited $300, while the cash account is credited $300. The account’s total balance will reduce by $300, i.e., $950-$300 = $650.

Paying $275 for a rental video is a transaction that reduces the balance by $275. Equally, the transaction affects two accounts –a rental video account and a cash account. The equipment account will be debited $275, while the cash account will be credited $275. The balance at the end of the transaction will be $650-$275 = $375.

Although Duncan arranged for ball machines during September for $250, the arrangement will not have an impact on the current account balance; rather, the $100 that was paid in advance is the amount that will have an effect on the balance. The $100 paid will reduce the current balance by $100; thus, the balance at the end of the transaction will be $275.

Receiving $1750 for the lessons she offered in September is an income that increases account balance; however, it will only affect her personal account balance and not the company’s balance since she can keep such earnings as part of her income/salary. Receiving $1750 will, therefore, increase her personal account balance to close at $2025.

Receiving $600 in fees from the use of the ball machines during September is an income to the company. The payment has the effect of increasing the company’s balance by $600. The balance at the end of the transaction will be $2625 (2025+600).

The $800 payment for salaries reduces the company’s balance by $800. The balance at the end of the transaction will be $1825 (2625-800)

Just like transaction 7, transaction 8 reduces the company’s current balance by $290. Thus, the balance at the end of the transaction will be $1535 (1825-290).

Receiving services is part of the company’s expenditure; thus, it reduces the company’s balance by $1300. The balance at the end of the transaction will be $235 (1535-1300)

The cost of supplies at hand has to be adjusted by adding $60 because it was found out that it totaled $180 and not $120. This transaction has no impact on the current balance; rather, it affects the company’s balance sheet.

Withdrawing $400 for personal use as of September has an impact of reducing the current balance by $400. The balance at the end of the transaction will be $-165 (235-400), which means that the company will close the month with an overdraft of $165.

N-Volley’s Income Statement as of September 30

Heading	Amount ($)	Balance($)
Revenues
Lessons Income	1750
Ball Machine Fees	600
Management Income	1300
Total Revenues		3650
Expenses
Salaries	800
Rental Video	275
Tennis Supplies	300
Miscellaneous Expenses	290
Total Expenses		(1665)
Net Income		1985

 

N-Volley’s Statement of Owner’s Equity as of September 30

Heading	Amount ($)	Balance ($)
Owner’s equity Balance as of August 30	950
Additional Investment:
Supplies	300
Owner’s withdrawals	(400)
Owner’s Equity as of September 30		850

N-Volley’s Balance Sheet as of September 30

Heading	Amount ($)
Assets
Account Balance	950
Investment (Tennis Equipment)	300
Total Assets	1250
Liabilities
Owner’s Equity	850
Bank Overdraft	400
Total Equity and Liabilities	1250

5a. Evaluation of Lisa’s Alternatives

Based on the two alternatives Lisa has to choose from, the two jobs have both pros and cons, but there is a better alternative among them. To understand, it is good to look at the total income that accrues to the two jobs and determine the workload (Ryan, 2016). Regarding the N-Volley, Lisa will get a weekly income of $325, thus accruing to $1300 at the end of every month. In the waitress job, Lisa will get an hourly rate of $10 while working 30 hours a week. The total income that will accrue to Lisa weekly will be $300, which adds to $1200 per month.

In comparing the two jobs, N-Volley’s job rewards $25 more monthly income than the waitress’s job. On the same note, it is also worth looking at other benefits that accrue to the two jobs. The waitress job has no allowance attached to it; thus, if Lisa takes up the job, she will have to be contented with $1200 monthly and nothing more. However, if Lisa continues with the N-Volley job, she will benefit from the allowances that she earns from lessons. Basically, based on the analysis of the two jobs, it will be prudent for Lisa to continue working with N-Volley since it is more rewarding than the waitress’s job.

5b. Lisa’s Other Considerations

Before taking the job at the N-Volley, Lisa should consider other factors such as job security, experience, and expertise that she will acquire, job flexibility, and income sustainability. Job security will ensure that she has employment that guarantees her a future (Bhattacharya & Sengupta, 2009). On the same note, since she is still studying, the experience and expertise she will acquire in the N-Volley’s job should be in line with her profession.

References

Bhattacharya, M. S., & Sengupta, N. (2009). Compensation management. New Delhi: Excel Books.

Ryan, L. (2016). Reinvention roadmap: Break the rules to get the job you want and career you deserve. Dallas, Texas: BenBella Books.

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Lisa Duncan Case

How To Complete The Written Paper Requirement
The Written Paper is a requirement of the course.

The Written Paper must be submitted in Microsoft Word format.

If a paper is not turned in, a penalty deduction of 200 points (3 LETTER GRADES) will also be assessed for not completing a requirement of the class. (Meaning you will not pass the class). Late papers are not accepted.

Topic: Case CP 1-3 pages 48-49 of the text:

Transactions and financial statements
Lisa Duncan, a junior in college, has been seeking ways to earn extra spending money. As an active sports enthusiast, Lisa plays tennis regularly at the Phoenix Tennis Club, where her family has a membership. The president of the club recently approached Lisa with the proposal that she manage the club’s tennis courts. Lisa’s primary duty would be to supervise the operation of the club’s four indoor and 10 outdoor courts, including court reservations.

In return for her services, the club would pay Lisa $325 per week, plus Lisa could keep whatever she earned from lessons. The club and Lisa agreed to a one-month trial, after which both would consider an arrangement for the remaining two years of Lisa’s college career. On this basis, Lisa organized Serve-N-Volley. During September 2016, Lisa managed the tennis courts and entered into the following transactions:

Opened a business account by depositing $950.

Paid $300 for tennis supplies (practice tennis balls, etc.).

Paid $275 for the rental of video equipment to be used in offering lessons during September.

Arranged for the rental of two ball machines during September for $250. Paid $100 in advance, with the remaining $150 due October 1.

Received $1,750 for lessons given during September.

Received $600 in fees from the use of the ball machines during September.

Paid $800 for salaries of part-time employees who answered the telephone and took reservations while Lisa was giving lessons.

Paid $290 for miscellaneous expenses.

Received $1,300 from the club for managing the tennis courts during September.

Determined that the cost of supplies on hand at the end of the month totaled $180; therefore, the cost of supplies used was $120.

Withdrew $400 for personal use on September 30.

As a friend and accounting student, you have been asked by Lisa to aid her in assessing the venture.

Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:

Cases & Projects
Enlarge Image
Prepare an income statement for September.

Prepare a statement of owner’s equity for September. The statement of owner’s equity for a proprietorship is similar to the retained earnings statement for a corporation. The balance of the owner’s capital as of the beginning of the period is listed first. Any investments made by the owner during the period are then listed and the net income (net loss) is added (subtracted) to determine a subtotal. From this subtotal, the owner’s withdrawals are subtracted to determine the increase (decrease) in owner’s equity for the period. This increase (decrease) is then added to (subtracted from) the beginning owner’s equity to determine the owner’s equity as of the end of the period.

Prepare a balance sheet as of September 30.

Assume that Lisa Duncan could earn $10 per hour working 30 hours a week as a waitress. Evaluate which of the two alternatives, working as a waitress or operating Serve-N-Volley, would provide Lisa with the most income per month.

Cases & Projects Discuss any other factors that you believe Lisa should consider before discussing a long-term arrangement with the Phoenix Tennis Club.

Complete sections 1-5 of this case.

Present a paper detailed with facts, figures, and any necessary charts to support your arguments.

Reach a conclusion concerning the best business decision that should be made based on the facts.

All papers must include the following:

Cover page:

Provide the name of the course, the title of your paper, and your name.

Executive summary:

This will be where you set up the problem stating the situation and the details for the one-month deal at the tennis club. You will answer 5a and 5b here also: (5a) general statement of working as a waitress vs. tennis club income, and (5b) discussing any other factors that you believe Jan should consider before entering into a long-term arrangement with the tennis club. You should reach a conclusion and state it here. It summarizes main ideas, conclusions, or recommendations explicitly so that the reader can understand the issues by reading this one page.

Body or details section:

Uses for answering # 1, 2, 3, 4, 5a, 5b – prepare all the information and statements as shown in the text in chapter 1. Also, for 5a: do a detailed analysis of which alternative Jan should accept based on income per month. Show this analysis in the details section. The body is used for development and expansion of the executive summary. It Includes explanations, charts, examples, analysis, steps, reasons, arguments, and factual details, and financial statements. This part of the paper expands and supports your executive summary. You must have an effective conclusion and recommendation.

Bibliography page (separate page):

If you use any outside source for reference you must have a bibliography page.

Other requirements:

Total number of pages: not more than 5 or 6
Submit the paper to the professor using the Assignments link in Canvas by the due date.
The paper must be typed and double spaced.
You must have your paper proof read by one other person. You must put their name on the cover page stating that they have reviewed the paper for errors.
Your paper will be graded on the quality of the content of the paper, grammar, and following the rules outlined above.