Scenario #1: Financial statements and ratios

Below you will find the list of accounts of Limo Belle Services Inc. (in Canadian dollars)

 

	September 30, 2012	September 30, 2011
Accumulated Depreciation – limousines	30,000	20,000
Depreciation Expense – limousines	10,000
Other expenses	70,000
Retained earnings	4,000	4,000
Share capital	1,000	1,000
Income taxes	35,000
Wages	100,000
Limousines	90,000	60,000
Dividends declared	80,000
Cash	2,000	4,000
Note payable (non-current)	50,000	30,000
Expenses payable		10,000
Accounts Receivable		1,000
Sales	300,000
Wages payable	2,000

 

1. From this list of accounts, prepare the following:
   • an Income Statement for period ended Sept. 30, 2012
   • a Balance Sheet as of Sept. 30, 2012 with comparative figures for 2011 – a Statement of Stockholders’ Equity as of Sept. 30, 2012.  

 

(Note that the amount of 2012 retained earnings is the same as in 2011 because the 2012 net income and dividend amounts have not yet been added or deducted.)  

2. Referring to the financial statements, calculate the Current Ratio and the Net  Profit Margin.

 

 

Scenario #2: Financial statements and ratios

 

Here is the list of Media Medium accounts as at November 30, 2012 (in Canadian dollars).

 

Depreciation expense	3,200
Insurance expense	3,500
Prepaid insurance	1,600
Building, net	156,000
Retained earnings as at Nov 30, 2011	30,000
Trucks and material, net	41,600
Share capital	90,000
Various expenses	2,800
Receivables	1,300
Dividends payable	1,500
Dividends declared	3,000
Bank loan	4,800
Cash	14,200
Payables	5,200
Administrative expenses	21,100
Mortgage Payable	74,000
Taxes payable	2,800
Income taxes	6,300
Finance income	1,700
Finance expenses	6,800
Wages	21,000
Wages payable	1,400
Land	32,000
Sales	103,000

Assignment:

 

1. From this list of accounts, prepare an Income Statement, a Balance Sheet and a Statement of Stockholders’ Equity as of the period ended Nov. 30, 2012. Use an Excel spreadsheet to draw up the financial statements and its presentation. 

 

2. Referring to the financial statements, calculate the Current Ratio and the Net Profit Margin.

Scenario #3:  JOURNALIZING COMMON TRANSACTIONS

 

In January 4, 2019, five individuals set up a new corporation, Fortress Reconstruction Inc., to engage in the house renovation business.  Following are some of the transactions made by the corporation during the year:

1. Each individual contributed $5,000 for which each received 1000 shares of stock with a par value of $0.50 per share.
2. Received saws, hammers and other building supplies worth $3,000 that had been purchased on credit from Stratus Building Supplies, payable in three months.
3. Rented a small storage building where they paid $2,000 for past 6 months’ rent and another $2,000 next 6 month’s rent.
4. Acquired a $15,000 loan from the bank, payable in five years.
5. Completed a house renovation where customer paid $8,000, with another $4,000 payable in the next two months.
6. Received $5,000 in advance payment from a customer whose renovation project will commence next year.

 

ASSIGNMENT:

For each transaction, state the journal entry (account and amount to be debited or credited) to be posted on the Accounting records.

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