Problem One: Below is the financial data for One Corporation for 2013, 2014 and 2015
2015 2014
1. Equipment $83,005 Cash $14,500
Cash $17,286 Marketable Securities $9,000
Accounts Receivable $49,317 Accounts Receivable $31,000
Owner's Equity $265,230 Allowance for Bad Debt $2750
Plant $121,300 Plant $121,300
Land $80,030 Land $80,030
Accounts Payable $57,424 Equipment $83,005
Marketable Securities $5,000 Accounts Payable $49,000
Inventory $53,716 Long-Term Liabilities $75,000
Long-Term Liabilities $80,000 Inventory $46,000
Allowance for Bad Debt $7,000 Owner's Equity $258,085
Net Sales $611,873 Interest Expense $6400
Income Taxes $20,026 Operating Expense $97,000
Operating Expenses $122,183 Net Sales $468,065
Interest Expense $6400 Cost of Goods Sold $287,015
Cost of Goods Sold $428,354 Income Taxes $16,775
2013
Owner's Equity $244,752
Accounts Payable $51,400
Cash $12,996
Accounts Receivable $34,620
Allowance for Bad Debt $5,000
Inventory $48,201
Plant $121,300
Land $80,030
Marketable Securities $4,000
Equipment $83,005
Long-Term Liabilities $83,000
Cost of Goods Sold $335,555
Income Taxes $19,200
Interest Expense $6400
Operating Expense $104,121
Net Sales $511,773
Required:
Prepare a multi-step Income Statement for each year.
Prepare a balance sheet for each year using the information given.
Calculate Working Capital, Return on Investment and Return on Equity Ratios for each year.
Calculate Current Ratio and Acid-Test Ratio for each year.
Conduct a Trend Analysis and write a brief analysis on the financial position of the firm.
Problem Two: The following transactions occurred during the first 30 days of operation of a new services company:
January 1 Owners invested Cash of $25,000
January 3 The Company borrowed $20,000 from a bank
January 4 Equipment was purchased for $12,000 on account
January 5 Office Supplies were purchased for $2600 with Cash
January 7 $2500 Cash was spent on advertising to let the public know about the new company
January 8 Revenue of $7500 was earned on account
January 10 Revenue of $1250 was earned and received as Cash
January 11 Revenue of $1000 was earned on account
January 13 Paid $750 with a check toward Accounts Payable
January 15 Revenue of $6000 was earned on account
January 15 Employee wages of $2750 were paid with Cash
January 16 Revenue of $4300 was earned and received as Cash
January 17 $2500 was spent on advertising with a check
January 18 Received $1500 Check (a check is considered cash) to be applied against on account from customer
January 19 Revenue of $1600 was earned on account
January 20 Paid $750 cash toward Accounts Payable
January 21 Equipment was purchased for $8500 Cash
January 22 Revenue of $10,000 was earned and received as Cash
January 23 Paid $1000 Check toward bank loan
January 24 Paid Utilities bill of $1000 with Check
January 25 Revenue of $3000 was earned on account
January 26 $2500 Cash was spent on advertising
January 27 Paid $800 toward Accounts Payable
January 28 Revenue of $9100 was earned and received as Cash
January 29 Employee Wages of $2750 were paid with Cash
January 30 Paid $1000 Cash toward bank loan
If cash (or a check is received) on account, this means that accounts receivable is credited (decreased)
If revenue is earned on account, accounts receivable is debited (increased)
If cash is paid on account, accounts payable is debited (decreased), while cash is credited (also decreased)
- Prepare journal entries for each of the transactions in either Word or Excel
- Prepare a Chart of Accounts (for example 100 Cash, 101 Accounts Receivable, 102 Equipment, 201 Accounts Payable)
- Set up T accounts in an Excel spreadsheet for each category and record transactions (debits and credits)
- Calculate net income for the month dated January 31, 2014 by preparing a detailed income statement (listing out each individual expense)
- Prepare a balance sheet dated January 31, 2014
- Prepare a short written analysis of your company's financial performance during its first month of operations. Include quantitative data in your summary. A paragraph or two is expected.