Cango Week 3
Assumptions: 1. At the beginning of 2009, CanGo purchased the online gaming company. This purchase was for cash, paid for through the proceeds of the IPO and results in goodwill. 2. 90% of the online book sales comes from JIT, the other 10% through the inventory which CanGo possesses. 100% of the CD/DVD/MP3 come through CanGo inventory. The result is that 80% of ALL sales is JIT and 20% is inventory. 3. There is one warehouse for shipping of books and one plant for manufacturing. 4. There are three divisions: a CD/DVD/MP3 division, an online gaming division and a books division. All manufacturing takes place in the CD/DVD/MP3 division. 5. The IPO took place at the beginning of 2009. 6. The CD/DVDs were customized beginning in 2008. The MP3 players were built beginning in the start of 2009. 7. The online gaming company was purchased for $30,000,000 and both Elizabeth and Andrew initiated the process. 8. The company began in 2006, has a VC infusion in 2007 and 2008. It showed a profit in 2008 and 2009. Its only profitable division is the online book sales division. 9. It has some type of international operations, hence the need for a "translation gain or loss" in owner's equity. 10. It has an extraordinary loss from fire and a sale of a segment of its business in 2009.
Balance Sheet ASSETS | December 31, 2009 | | Cash | $20,900,000 | | Marketable Securities | $117,000,000 | | Accounts Receivable | $33,000,000 | | Less: Allowance for Bad Debts | $(880,000) | | Net Accounts Receivable | $32,120,000 | | | | | Inventory | | | Raw Materials | $2,000,000 | | Work-in-process | $1,000,000 | | Finished Goods | $5,000,000 | | Inventory Purchased for Resale | $24,000,000 | | Total Inventory | $32,000,000 | | | | | Plant, Property and Equipment | $6,700,000 | | Less: Accumulated Depreciation | $(320,000) | | Net Plant, Property and
Balance Sheet ASSETS | December 31, 2009 | | Cash | $20,900,000 | | Marketable Securities | $117,000,000 | | Accounts Receivable | $33,000,000 | | Less: Allowance for Bad Debts | $(880,000) | | Net Accounts Receivable | $32,120,000 | | | | | Inventory | | | Raw Materials | $2,000,000 | | Work-in-process | $1,000,000 | | Finished Goods | $5,000,000 | | Inventory Purchased for Resale | $24,000,000 | | Total Inventory | $32,000,000 | | | | | Plant, Property and Equipment | $6,700,000 | | Less: Accumulated Depreciation | $(320,000) | | Net Plant, Property and