ACCOUNTING

ASSIGNMENTS
Submitted as a group assignment for Accounting
course by:
Aghnia Pertiwi Mulya (29119079)
Azka Keyviana (29119029)
Fauzan Khairul Muhshi (29119180)
Shafira
Exercise 1.7 Accounting Terminology

Term Description
Financial Accounting c. The area of accounting that refers to providing
information to support external investment and credit
decisions.
Management Accounting g. The area of accounting that refers to providing
information to support internal management decisions.
Financial Reporting f. A broad term that describes all information provided to
external users, including but not limited to financial
statement.
Financial Statements a. Statement of financial position (balance sheet),
income statement, statement of cash flows.
General-purpose h. The fact that the same information is provided to various
Information external users, including investor and creditors.
Integrity i. An important quality of accounting information that
allows investors, creditors, management, and other users to
rely on the information.
Internal Control e. Procedures and processes within an organization that
ensure the integrity of accounting information.
Public Accounting b. The segment of the accounting profession that relates to
providing audit, tax, and consulting services to clients.
Book Keeping d. The procedural aspect of accounting that involve
keeping detailed records of business transactions, mush of
which is done today by computer.
Case 2.2

PT ACE HARDWARE INDONESIA Tbk

BALANCE SHEET
DESEMBER 31, 2018
 PT ACE HARDWARE INDONESIA Tbk
INCOME STATEMENT
FOR THE YEAR ENDED DESEMBER 31, 2018

a. The largest asset is Inventories (Rp 2,5 Trillion). The industry of company is trading
hardware retail and non-retail (merchandise inventory).
Yes, because the company is trading equipment so they must have a lot of inventory to
sell to customer. The product is Home improvement products, lifestyle products and
toys products. In this kind of field industry this company is one of the largest among
others.

b. Review company statement of cash flow.

 Source : the source from their operational because they have a positive cash
flow from operations. The other hand, they have an additional cash from selling
a vehicles.
Uses : in two period of investing activities, the company buy properties and
buy equipment.
  Yes, in this company, it’s increase because selling vehicles and decrease
because investing an asset.
 Source : in 2018 they have loan from Bank and have a cash from relation parties.
Uses : they used to paid dividend and paid loan from relation parties. (both
period the company reduce the loan rather than getting more loan)
 Yes, loan from bank and related parties increase cash and pay dividend
decrease the cash.

c. Yes, in two period the company have a positive Net income (2017 : Rp 742 Million and
2018 : Rp 1.044 Million) . company sales for 2017 is Rp 5.77 Million and for 2018 Rp
7.124 Million .The percentage of Net income :
742
2017 : 5877 = 12,63%

1044
2018 : 7124 = 14,65%
So, Net income increase 40,89%

d. First is equity : if company doesn’t have enough equity and depend from bank loan it
can make company hard for pay the interest expense every month. Equity reflects
ability the company.
Second is Loan : loan means every loan include loan from Bank and loan from
shareholders. If the company has a lot of loan it will make company’s cashflow tight.
Third is Fixed Asset : how wealthy enough the company? If the company has a high
fixed asset than loan from Bank it can be second way out if the company was default.
But a growing company usually investing machine or property to support their
operational so they can make the higher profit.

e. The amount is 10 percent of its total asset. (10 % x Rp 5.321 Million = Rp 532 Million).
In existing loan they have a bank loan Rp 115 Million.
So if we want lender the company total Bank loan is Rp 647 Million. Company’s equity
Rp 4.235 Million.

Using Financial ratios to know repayment capacity the company:

 DER (Debt to equity)
Debt from Bank (short-term and long-term) : Rp 115 Million
DER before add. loan: 115/4235 = 2,71%
DER after add. Loan : 647/4235 = 15,27%
It’s still under 100%, so the portion of Bank loan still low. They can easily paid
the bank loan.
 Leverage
All debt (short-term and long-term): Rp 1.085 Million
Leverage before add. Loan: 1085/4235 = 25,62%
Leverage after add. Loan: 1617/4235 = 38,18%
The company has Capability to repay all of debt. And they has still room for
increase loan (including Bank loan)
 Current Ratio (Liquidity)
Current Asset/Current Liability : 4096/631 = 649,19%
Because current ratio > 100% the company has extremely liquidity.
Quick Ratio (only cash): 798/631 = 126.65%
They can paid all of short-term debt only with their cash.
  DSC (Debt Service Coverage)
EBITDA/(interest expense and Current portion long-term debt)
DCS before add. Loan : 1.229/(46,9 + 0) = 2.620,47% or 26.20 x
DCS after add. Loan :1.229/((46,9+55,86) + 0) =1.195,99% or 11.95 x
Assume that interest rate for a new loan is 10,5%.
It means the company has ability to pay loan from bank because DSC > 1. The
higher DSC means the company has a good repayment capacity.

If we look the financial ratios, the company has a good financial performance because
the ratio is good, sales and net income in two period are increase, they have positive
cash flow from operations that might be they doesn’t really need a bank loan. So I’ll
lend them the money.
 Exercise 3.7A

a. Prepare General Journal

SANLUCAS, INC.
GENERAL JOURNAL
JUNE 4 - 30, 2019

Date Account Titles and Explanation Debit Credit

June. 4 Cash 1,800
Note Payable 1,800
Borrowed cash from Community Bank by issuing note payable.
9 Cash 1,920
Account Receivable 1,920
Collected an account receivable from Nina Lesher.
10 Inspection Supplies 180
Cash 180
Purchased inspection supplies.
17 Account Receivable 1,980
Inspection Revenue 1,980
Billed homeowners for inspection service. The entire amount is
due on July 17.
25 Advertisement Expenses 240
Cash 240
Paid WLIR Radio for Ads.
28 Testing Expenses 1,560
Cash 1,560
Recorded and paid for testing expenses.
30 Salaries Expenses 1,320
Cash 1,320
Record and paid June salaries.
b. Prepare T account

SANLUCAS, INC.
THE LEDGER

Liability and Owner's Equity Accounts

Assets Accounts
Cash Note Payable
6/1 6,120 6/10 180 6/1 2,400
Bal.
6/4 1,800 6/25 240 6/4 1,800
$4,200
6/17 1,920 6/28 1,560
Bal.
6/30 1,320 Retained Earnings
$6,540

6/1 2,160 Bal.

$2,160

Account Payable

Account Receivable 6/1 1,020 Bal.

$1,020
6/1 3,120 6/9 1,920
Bal.
6/17 1,980
$3,180 Capital Stock
Bal.
6/1 3,600 $3,600

Inspection Supplies
Dividends
Bal.
6/1 960
$720 6/1 720
Bal. 6/10 180
$1,140

Inspection Revenue

6/1 10,020 Bal.

6/17 1,980 $12,000

Salaries Expenses

6/1 5,880
Bal.
$7.200 6/20 1,320

Advertisement Expenses
6/1 360
Bal.
$600 6/25 240
 Testing Expenses

6/1 2,040
Bal.
$3.600 6/28 1,560

c. Prepare Trial Balance

SANLUCAS, INC.
TRIAL BALANCE
JUNE 30, 2019

Cash $6,540
Account Receivable $3,180
Inspection Supplies $1,140
Note Payable $4,200
Account Payable $1,020
Capital Stock $3,600
Retained Earning $2,160
Dividends $720
Inspections Revenue $12,000
Salaries Expense $7,200
Advertising Expense $600
Testing Expense $3,600
$22,980 $22,980

d. Yes. Because they have a positive net profit and ending cash positive. Even they paid the
dividends, retained earnings still positive

Exercise 4.2 (Adjusting account)

Income Statement Balance Sheet

Adjusting
Entry Net Owners’
Revenue Expenses Assets Liabilities
Income Equity

a. NE I D D NE D

b. NE I D NE I D

c. I NE I I NE I
 d. NE I D NE I D

e. NE I D D NE D

f. I NE I NE D I

Exercise 5.3

WILDERNESS GUIDE SERVICE, INC.

INCOME STATEMENT
DECEMBER 31, CURRENT YEAR

Revenue 102,000

Expenses:
Salary expense 87,500
Camping supply expense 1,200
Insurance expense 9,600
Interest expense 1,700
Depreciation expense: equipment 5,000
Total Expense 105,000
Net Income (Loss) -3000

WILDERNESS GUIDE SERVICE, INC.

STATEMENT OF RETAINED EARNINGS
DECEMBER 31, CURRENT YEAR

Retained Earnings 15,000

Net Income 3,000
Dividend 1,000
Total deduction 4,000
Retained Earnings, Dec 31 Current Year 11,000
 WILDERNESS GUIDE SERVICE, INC.
BALANCE SHEET
DECEMBER 31, CURRENT YEAR

Assets

Current Assets:
Cash 12,200
Account Receivable 31,000
Camping Supplies 7,900
Unexpected insurance policies 2,400
53,500
Fixed Assets:
Equipment 70,000
Accumulated depreciation: equipment -60,000
10,000
Total Assets: 63,500

Liabilities & Owner's Equity

Liabilities:
Note Payable 18,000
Account Payable 9,500
27,500
Owner's Equity:
Capital Stock 25,000
Retained Earnings 11,000
36,000
Total Liabilities & Owner's Equity 63,500

 Does the company appear to be liquid?

Yes, because they have Current ratio > 100% .
Current asset : $ 53,500
Current Liabilities: $27,500
Current Ratio : CA/CL : $53,500 : $ 27,500 = 194,54 %

 Has the company been profitable in the past?

Yes, because they have positive retained earning but also positive ending cash balanced.
Retained earnings positive means that the company has a net profit in the last period.