On Mar 15, Julio Trevino signed a rental agreement to control a fuel service place that was owned by the Octane Olive oil Company (here after, merely “Octane”). Trevino had contacted the regional sales supervisor of Octane in response to a advertisement that solicited applicants “with $25, 000 to invest” to lease and operate a newly built Octane fuel service train station. Trevino had been able to accumulate approximately $32, 000 for investment reasons as a result of a $25, 500 inheritance and savings around the salary of $865 weekly he gained as administrator of a support station controlled as a independent department of the J.
C. Penney store. The majority of this $32, 000 was held in federal government bonds.
The regional revenue manager intended for Octane was impressed with Trevino’s personal and monetary qualifications, and after several interviews, a lease agreement was signed. During one of these group meetings the revenue manager up to date Trevino that the new station would be looking forward to occupancy on, may 1st by a total expense cost of 300 dollar, 000. Of the amount, $22.99, 000 acquired already been covered land, and a total of $200, 500 would be spent for a building that would be “good for about 45 years”.
In discussing profit potential, the revenue manager pointed out that Octane’s nationwide advertising program and the client appeal generated by the desirable station “will be worth at least $30, 1000 a year for you in client goodwill. “
The rental agreement agreed that Trevino pay accommodations of $1, 250 monthly for the station plus $0. ’04 for each gallon of fuel delivered capital t the stop by Octane1. A separate contract was as well signed where Octane opted for sell and Trevino decided to buy some minimum quantities of gasoline and other car parts for the service place operation.
As both evidence of good faith and as a prepayment on certain obligations that he would shortly incur to Octane, Trevino was necessary to deposit 20 dollars, 000 with Octane at that time the lease was signed. Trevino brought up the cash just for this deposit by simply liquidating authorities bonds. Octane used most of this money to defray certain obligations incurred simply by Trevino to the oil firm prior to the starting of the new station. The deductions through the $20, 500 deposits were applied because follow:
1 The lease, which covered a period of just one year starting May one particular, was immediately renewable unless notice of cancellation was handed by possibly party by lease thirty days prior to a wedding anniversary date. The regional revenue manager in the Octane Olive oil Company estimated that around 150, 500 gallons of gasoline can be delivered to Trevino’s Service Station during the 1st 12 months of operations. Eventually, Trevino’s records revealed that twenty-seven, 000 gallons (including the first inventory) were actually sent during the initially two months of operation.
The equipment, including ground and hydraulic jacks, a battery charger, tune-up sets, and oil and grease weapons, became Trevino’s property. An agent of the oil company mentioned that this products would last about five years. The unpaid, non-interest bearing harmony of $10,50, 300 Trevino owed Octane for equipment was to become paid in five semi-annual installments of $2, 060 each. The first this sort of payment was due Nov 1 . The $2, 755 remaining through the $20, 500 originally deposited with Octane was came back to Trevino on Apr 30. He deposited this money in an exclusive checking account he previously set up for his assistance station endeavor.
Just before starting for business on, may 1, Trevino converted several additional govt bonds into $7, 000 cash which in turn he likewise placed in the service train station account. Just before May 1, he wrote the following inspections: $1, 650 for office furniture that recently had an expected your life of 10 years, and $900 for a flames and injury insurance policy providing coverage for a one year period beginning Might 1 . About April 40, Trevino transported $200 from the service station checking account to the cash drawer at the support station. It had been Trevino’s purpose to put in in the traditional bank all but $200 of the funds on hand at the close of each and every business day. The balance in the service station checking account at the start of business was, therefore , $7, 005. In addition , Trevino acquired $2, seven-hundred in a savings account.
On May one particular, the service station was opened for people who do buiness. In his work to build up customers, Trevino worked well approximately sixty hours weekly compared with forty in his previous job. Additionally , three other people were utilized on whether full or perhaps part-time basis. Trevino was reasonably pleased with the appui he was able to build up during the first 8 weeks the station was open up. At the end of June, however , he experienced it would be attractive to take a much more careful take a look at how having been making in his start up business venture. Trevino felt that he should certainly record his progress and present placement in a form that would be useful not only currently but also for relative purposes down the road, perhaps a six months intervals ending upon June 30 and December 31.
Trevino maintained a straightforward record keeping system in which cash receipts and money payments had been itemized daily in a loose-leaf notebook. Independent pages were reserved for certain items through this notebook. Throughout the months of May and June, this cash statements and payments had been registered:
The 500 usd listed in funds receipts since rental via parking place had been receive from a great adjacent business establishment that employed one percentage of the service station site as a auto parking space for certain of it is employees. The rental received covered a time extending coming from May 15 to July 15.
Beyond the record of money receipts and payments, reveal listing was kept of the amounts of cash that were because of from, or perhaps owed to, other people or corporations. An analysis of these information revealed that $143 was credited the business pertaining to gas, olive oil, and car servicing by a wealthy widow friend from the Trevino family members who recommended to offer on a credit rating basis. Also, on the nighttime of Summer 30, one of many employees finished waxing a vehicle for a frequent customer who had been out of town and would be struggling to call for his car till July 3. Trevino acquired quoted a cost of $56 for this work.
Trevino remembered that when he once worked at an automobile agency, he had heard that setting up a book for money owed equal to two percent of all outstanding accounts was a good idea. Trevino had also jotted down the reality he great family experienced used gas and essential oil from the services station really worth $101 at retail rates, for which not any payment was made. Approximately $79 was paid to Octane Oil Company with this merchandise.
Another summary of his records revealed the following unpaid bills resulting from operations in 06:
The services station’s employees had previous been paid on Saturday, June twenty eight, for services rendered through Saturday nighttime. Wages gained on June 29 and 30 will amount to $232 in the following Saturday’s salaries.
Trevino got a physical products on hand on the nighttime of June 20, and he located gasoline, motor oil, grease, wheels, batteries, and accessories available that acquired cost $10, 018. Whilst Trevino was figuring his inventory position, he as opposed his recorded gallonage product sales of gasoline on hand towards the end of the period against the amount of gasoline at the beginning inventory additionally deliveries. In this fashion, Trevino discovered that shrinking due to evaporation, temperature improvements, waste and also other causes amounted to 302 gallons of gasoline that he estimated had price $360.
Later in June, Trevino’s married son noticed that he would be unable, as a result of prolonged illness to make repayment of $192 for fascination expense and $800 to get principal repayment on a $2, 400 mortgage. Trevino, who acted since co-signer on the note, will be obligated to fulfill this repayment on July 1 .
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