Your Questions About Internet Marketing Inc
Donald asks…
E-Antiques Inc. is an Internet-based market maker for buyers and sellers of antique furniture and jewellery. T?
E-Antiques Inc. is an Internet-based market maker for buyers and sellers of antique furniture and jewellery. The company allows sellers of antique items to list descriptions of those items on the E-Antiques web site. Interested buyers review the web site for antique items and then enter into negotiations directly with the seller for purchase. E-Antiques receives a commission for each transaction.
The company, founded in 2000, initially obtained capital through equity funding provided by the founders and through loan proceeds from financial institutions. In early 2003, E-Antiques became a publicly held company when it began selling shares on a national stock exchange. Although the company had never generated profits, the stock offering generated huge proceeds based on favourable expectations for the company, and the stock quickly increased to above $100 per share.
Management used the proceeds to payoff loans to financial institutions and to reacquire shares issued to the company founders. Proceeds were also used to fund purchases of hardware and software to support the online market. The balance of unused proceeds is currently held in the company’s bank accounts.
Required
a.Before performing analytical procedures related to the capital acquisition and repayment cycle accounts, consider how the process of becoming publicly held would affect accounts at E-Antiques Inc. Describe whether each of the following balances would increase, decrease, or experience no change between 2002 and 2003 because of the public offering:
(1)Cash
(2)Accounts receivable
(3)Property, plant, and equipment
(4)Accounts payable
(5)Long-term debt
(6)Common stock
(7)Retained earnings
(8)Dividends
(9)Revenues
b.During 2004, the stock price for E-Antiques plummeted to around $19 per share. No new shares were issued during 2004. Describe the impact of this drop in stock price on following accounts for the year ended December 31, 2004:
(1)Common stock
(2)Retained earnings
c.How does the decline in stock price affect your assessment of client business risk and acceptable audit risk?
Jere answers:
Although the company had never generated profits, the stock offering generated huge proceeds based on favourable expectations for the company, and the stock quickly increased to above $100 per share.
Management used the proceeds to payoff loans to financial institutions and to reacquire shares issued to the company founders. Proceeds were also used to fund purchases of hardware and software to support the online market. The balance of unused proceeds is currently held in the company’s bank accounts.
Looking at the above information, these accounts would have increase:
1) Cash
(3) Property, plant, and equipment
(6) ? Common stock–Even though the money was used to reaquire shares from the owner’s, the Common Stock account should have increased.
(8) ? Dividends–Only if dividends were declared. If not, there would be no change.
These Accounts would have decreased:
(5) Long-term debt
No Change:
(2) Accounts receivable
(4) Accounts payable
(7) Retained earnings
(9) Revenues
b. During 2004, the stock price for E-Antiques plummeted to around $19 per share. No new shares were issued during 2004. Describe the impact of this drop in stock price on following accounts for the year ended December 31, 2004:
A change in market price will not affect any accounts.
(1) Common stock
(2) Retained earnings
c. How does the decline in stock price affect your assessment of client business risk and acceptable audit risk?
It should increase both.
Donna asks…
According to Google.Inc which contry will be the largest internet market in the future?
Jere answers:
Google’s chief executive Eric Schmidt has predicted that India and not China will become the world’s biggest Internet market in “about five or ten years from now, based on current trends.”
James asks…
GiftHouse.us.com? and Bullseye Marketing, Inc.?
Whoa! Stay away from these “free trial, free product” ads. For the first time in 10 years I clicked on the “Victoria Secret Free Fit Flop” pretty pink yahoo.ad. Clicking the pretty pink sent me to GiftHouse.us.com…learn from me and avoid these sites. Had to install new (additional) Spam Software, Had to cancel and reissue my visa card…the whole damn mess.
As expected, there is no Cust. Service Tel.# for GiftHouse.us.com and their contracted site Bullseye Marketing, Inc. GOOD NEWS IS, I have found Maryland State Attorney General Filings against this internet company who rides on the back on Bullseye Marketing, Inc. I’m searching for IP addresses in order to forward to the State of Washington Attorney Generals office. Any help is appreciated.
Jere answers:
Hi,
I have a lot of experience marketing small companies online (I have 3 companies). One of the best ways is to sign up at business directories and protals. These are basically listings of businesses (simliar to the phone book). The advantage is that these portals usually get a lot of traffic and they’re ranked high on Google because of all the quality links they contain.
My favorite portal is called Directory Exclusive. I signed up a few weeks ago because they’re giving a away a free business card holder when a person enter’s their company info. I received it in the mail 3 days ago =)
I don’t know if they still have that promotion, but you can try to get the free card holder here:
http://www.directory-exclusive-card-holder.info
Good Luck
Richard asks…
Do you think Yahoo! Inc will re-enter the China Internet Market now that Google is out?
Seriously, they never had any issues with human rights when the Chinese government wanted to seek information on any of the groups opposed to their rule. Yahoo cooperated fully with the Chinese and the information they provided to the Chinese government resulted in several people being tossed into Chinese prisons. Mr. Yang later settled with the families of those convicted by the Chinese courts to the tune of $100M, but only after Yahoo was brought up before a senate committee hearing on the issue. So, now that Google has decided to leave China due to censorship, will yahoo jump back in the ring in trying to boost their ad revenue? Remember, Yahoo makes 80% of their revenue from display ads posted on their sites. What do you think?
Jere answers:
I am not so sure about it.
Linda asks…
What does “YouTube Inc. is the Internet company to beat these days” mean in:?
YouTube Inc. is the Internet company to beat these days. Wowed by its meteoric rise — the 19-month-old site dishes up 100 million daily videos — startups and giants alike are crowding into the video-sharing market.
Jere answers:
In what? Www.youtube.com is a popular website that people use to post different videos online to share with their friends or random people. You should check it out
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