1. Record all 7 transactions using the financial transaction horizontal model. Use the example template below to format your transaction analysis Hint: a. Record transaction #3 in 2 parts (3a, 3b), #4 in 3 parts (4a, 4b, 4c), and #5 in
2 (5a, 5b) b. Show ending balance values for each account 2. Complete the following requirements: a. Format an income statement, balance sheet, and statement of cash flows for NCP for the period ending Dec 31, 2014 b. Compute the following ratios: i. Net Profit Margin ii. Current ratio iii. Asset turnover ratio (use ending total assets balance, not average assets) Excel horizonal transaction template example:
Assets Liabilities Shareholder Equity Trans # Cash Inventory Building Accumulated Depreciation = A/P Loan/P Capital stock Retained earnings
Check figure: Cash balance = $212,400 Transactions:
NCP begins operations July 1, 2014. The following transactions are completed during the period July 1 through December 31, 2014.
1. Company NCP is established by owner contributing $250,000 of her personal money and receiving all of the capital stock in exchange for her equity investment.
2. NCP purchases a small shop for $150,000.
3. NCP needs additional working capital so it takes a loan of $120,000 cash from the local bank on July 1. No payment on the loan principal amount is made in 2014. a. Interest expense is 6% per year, payable semi-annually.
4. NCP needs inventory to sell to customers: a. It the entire loan of $120,000 to purchase inventory that will be sold to customers. In addition, NCP purchases an additional $30,000 of inventory of credit. b. By the end of 2104, all but $6,000 of the credit purchase has been repaid.
5. NCP sells its inventory goods at a markup of 100% above cost. By December NCP has sold inventory at a cost of goods of $80,000. All sales are paid in cash.
6. NCP depreciates the shop on a straight-line basis over 20 years, no salvage value. The annual depreciation expense is $7500.
7. The owner of NCP withdraws $20,000 in cash as her salary for the operating period.