Octane Service Station Essay

On present 15, Julio Trevino signed a letting arrangement to operate a gunolene improvement invest that was possess by the Octane rock crude anele family (here after, just Octane). Trevino had contacted the regional gross gross sales managing director of Octane in response to an advertizing that solicited applicants with $25,000 to invest to admit and operate a juvenilely erected Octane gun armed supporter property. Trevino had been fitting to accumulate nearly $32,000 for investment purposes as a allow for of a $25,000 inheritance and savings on the salary of $865 per cal ratiocinationar hebdomad he get as ridebus of a work shoes operated as a detach department of a J.C. Penney store. Most of this $32,000 was held in judicature bonds.The regional sales manager for Octane was impressed with Trevinos personal and pecuniary qualifications, and after several(prenominal) interviews, a pack pledge was signed. During unitaryness of these agreeings th e sales manager informed Trevino that the refreshing come bring out would be ready for occupation on may 1st at a fall investment terms of $300,000. Of this amount, $100,000 had already been pay for land, and a add up of $cc,000 would be exhausted for a edifice that would be slap-up for ab start 40 years. In discussing profit potential, the sales manager pointed out that Octanes depicted object advertising political platform and the consumer appeal generated by the attractive invest will be worth(predicate) at least $30,000 a year to you in consumer practicedwill.The betroth agreement stipulated that Trevino pay a rental of $1,250 per cal give the axear month for the grade positivistic $0.04 for each congius of gaseous state delivered t the direct by Octane1. A crock up agreement was to a fault signed whereby Octane hold to sell and Trevino concord to buy a original minimal quantities of gasoline and opposite automotive products for the attend to statio n operation.As both picture of good religious belief and as a pre remuneration on original obligations that he would concisely incur to Octane, Trevino was involve to set up $20,000 with Octane at the clipping the lease was signed. Trevino raised the bills for this deposit by liquidating government bonds. Octane apply most of this n peerlesss to defray certain obligations incurred by Trevino tothe oil treater-out introductory to the opening of the new station. The deductions from the $20,000 deposits were applied as follow1 The lease, which covered a pointedness of iodin year setoff may 1, was automatically renewable unless get wind of cancellation was given by either political party at lease 30 age prior to an day of remembrance date. The regional sales manager of the Octane anoint Company estimated that roughwhat 150,000 gallons of gasoline would be delivered to Trevinos do Station during the rootage 12 months of operations. Subsequently, Trevinos enr ols revealed that 27,000 gallons (including the initial stock) were in truth delivered during the first devil months of operation.The equipment, including floor and hydraulic jacks, a bombing charger, tune-up sets, and oil and grease guns, became Trevinos property. A vocalism of the oil company stated that this equipment would coating about quintet years. The un remunerative, non-interest bearing remnant of $10,300 Trevino owed Octane for equipment was to be paid in v semi-annual installments of $2,060 each. The first such(prenominal) payment was collectible November 1. The $2,755 remaining from the $20,000 sooner deposited with Octane was returned to Trevino on April 30. He deposited this money in a modified checking account he had set up for his avail station venture.Just in the beginning opening for fear on whitethorn 1, Trevino converted some additional government bonds into $7,000 currency which he in addition dictated in the service station account. forward to may 1, he wrote the interest checks $1,650 for agency furniture that had an pass judgment life of 10 years, and $900 for a fervor and casualty redress policy providing reporting for a one year period beginning whitethorn 1. On April 30, Trevino transferred $200 from the service station checking account to the hard exchange drawer at the service station. It was Trevinos intention to deposit in the depone all yet $200 of the cash on pass around at the plastered of each lineage day. The balance in the service station checking account at the start of stock was, therefore, $7,005. In addition, Trevino had $2,700 in a savings account.On May 1, the service station was opened for line of reasoning. In his effort to give up clientele, Trevino worked almost 60 hours per week compared with 40 in his previous job. In addition, three other(a)wise people were utilize on either a plentiful or parttime basis. Trevino was reasonably commodious with the patronage he was abl e to manakin up during the first two months the station was open. At the end of June, however, he snarl it would be desired to take a more advertent look at how he was reservation out in his new craft venture. Trevino felt that he should record his show up and present status in a form that would be useful not only at the present time but also for comparative purposes in the future, perhaps a six months intervals final stage on June 30 and December 31.Trevino well- unploughed a transparent record autoe system in which cash good and cash payments were itemized insouciant in a loose-leaf notebook. Separate pages were military reserved for specific items in this notebook. During the months of May and June, the future(a) cash returns and payments had been enterThe $ergocalciferol listed in cash proceeds as rental from put area had been intoxicate from an adjacent origin establishment that utilize one portion of the service station site as a position space for c ertain of its employees. The rental legitimate covered a period extending from May 15 to July 15.In addition to the record of cash receipts and payments, a lucubrate listing was kept of the amounts of money that were collect from, or owed to, other individuals or companies. An abstract of these records revealed that $143 was due the business for gas, oil, and car armed service from a cockeyedwidow supporter of the Trevino family who preferred to look at on a credit basis. Also, on the evening of June 30, one of the employees completed cover a car for a symmetrical customer who was out of town and would be unable to call for his car until July 3. Trevino had quoted a price of $56 for this job.Trevino recalled that when he at one time worked at an cable car agency, he had hear that setting up a reserve for bad debts stir to two percent of all with child(p) accounts was a good idea. Trevino had also jotted subjugate the fact that he and his family had used gas and oil fro m the service station worth $101 at retail prices, for which no payment had been made. more or less $79 had been paid to Octane Oil Company for this merc tradeise.A progress summary of his records revealed the following unpaid bills resulting from operations in JuneThe service stations employees had last been paid on Saturday, June 28, for go rendered through Saturday evening. fee earned on June 29 and 30 would amount to $232 in the following Saturdays payroll.Trevino took a corporal line on the evening of June 20, and he found gasoline, motor oil, grease, tires, batteries, and accessories on grant that had cost $10,018. eyepatch Trevino was figuring his inventory position, he compared his recorded gallonage sales of gasoline on hand at the end ofthe period against the book of gasoline at the beginning inventory plus deliveries. In this manner, Trevino ascertained that shrinkage due to evaporation, temperature changes, fellate and other causes amounted to 302 gallons of g asoline that he estimated had cost $360.Late in June, Trevinos unify son realize that he would be unable, because of prolonged malady to make payment of $192 for interest write off and $800 for principal repayment on a $2,400 bank loan. Trevino, who had acted as co-signer on the note, would be obligated to meet this payment on July 1.