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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