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