Scenario #1: Financial statements and ratios

Here is the list of accounts of Extase Inc. as at September 30, 2012:

 

Accumulated Depreciation – trucks and equipment $31,000
Wages 84,100
Taxes payable 2,800
Land 63,000
Fringe benefits payable 5,400
Receivables 16,400
Sales 367,800
Dividends payable 5,500
Depreciation Expense 26,700
Cost of sales 161,600
Insurance Expense 11,200
Share capital as at October 1, 2011 200,000
Administrative expenses 31,100
Mortgage payable 114,000
Bank loan 21,800
Dividends declared 11,000
Accumulated amortization – building 63,000
Cash 18,000
Income taxes 6,900
Inventories 68,000
Prepaid insurance 2,400
Retained earnings as at October 1, 2011 92,800
Payables 41,000
Finance expense 15,100
Building 243,000
Trucks and equipment 182,500
Wages payable 4,100
Other expenses 8,200

 

Assignment:

  1. Prepare an Income Statement, a Balance Sheet and a Statement of Stockholders’ Equity as of September 30, 2012.
  1. Calculate the following performance ratios within one decimal place. (Show your formula and calculations).
    1. Return on Assets
    2. Return on Equity
    3. Current Ratio
    4. Average Collection Period
    5. Net profit Margin

 

Scenario #2: Bank reconciliation

You are given the following information about the Lamontagne Health Centre.

 

    Bank   Accounting records
Balance as at July 1   6,540   6,540
Plus:          
  July deposits:        
           July 10   2,000   2,000
           July 21     1,460   1,460
           July 31   _____   2,250
      10,000   12,250
  Interest deposited directly into the account      900    
       10,900    
Minus: July cheques      
                      110 455   455
                      111     830
                      112 763   763
                      113     170
                      114 125   125
                      115 500   500
                      116 257   257
  2,100   3,100
             Service charge 15    
             NSF cheque from a client      235    
  2,350    
 

Balance as at July 31

   8,550     9,150

 

Assignment:

Prepare the July bank reconciliation. Use an Excel spreadsheet to prepare the statement.

 

Scenario #3: Operating expenses

For each of the following cases, state whether an operating expense should be recognized, in what amount and during which period.

 

  1. On November 30, 2012, the company paid $5,000 to publish ten ads. During the period ended December 31, 2012, only five ads were published.
  2. The costs of a strike that took place in 2012 were $75,000.
  3. A semi-trailer, purchased at the beginning of the year and costing $135,000, travelled 320,000 kilometers in 2012. The company usually gets rid of its semi-trailers after they travel 1,600,000 kilometers.
  4. The company paid $499,700 in wages to its employees in 2012.
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