Part 1 - Income Statement (20 marks)

Names of group members (please fill in):

Maria Jana Minela Ilustre
Joanna Fijer
Ana Sidro
Alannah Kessir

Fresh Thinking Ltd.

Statement of Income
For the year ended December 31, 2020 and 2019
2020 2019
Sales $ 258,756.00 $ 196,603.00
Cost of Goods Sold 168,191.00 88,471.00
Gross Profit $ 90,565.00 $ 108,132.00

Operating Expenses
Advertising Expense $ 2,135.00 $ 2,772.00
Bad Debt Expense 4,060.00 8,424.00
Depreciation Expense, Building 6,000.00 6,000.00
Depreciation Expense, Furniture and Equipment 12,000.00 12,000.00
Insurance Expense 3,266.00 3,438.00
Utilities Expense 3,329.00 3,521.00
Wages Expense 39,564.00 49,189.00
Total Operating Expenses $ 70,354.00 $ 85,344.00
Operating Income $ 20,211.00 $ 22,788.00

Other Revenues (Expenses) $ -7,840.00 $ 23,051.00

Interest Revenue 500.00 475.00
Interest Expense - 10,000.00 - 11,000.00
Total $ -17,340.00 $ 12,526.00
Income before income tax $ 2,871.00 $ 35,314.00
Income tax expense 1,300.00 5,600.00
Net Income $ 1,571.00 $ 29,714.00
Part 1 - Retained Earnings Calculation (3 marks)
Names of group members (please fill in):
Maria Jana Minela Ilustre
Joanna Fijer
Ana Sidro
Alannah Kessir

RETAINED EARNINGS 2020 2019

Opening Retained Earnings 64,950 40,236
Net Income 1,571 29,714
Dividends Declared (15,000) (5,000)
Ending Retained Earnings 51,521 64,950
Part 1 - Balance Sheet (21 marks)
Names of group members (please fill in):
Maria Jana Minela Ilustre
Joanna Fijer
Ana Sidro
Alannah Kessir

Fresh Thinking Ltd.

Statement of Financial Position
As of December 31, 2020 and 2019
2020 2019
ASSETS
Current Assets
Cash $ 12,878.00 $ 35,795.00
Accounts Receivable 42,666.00 31,589.00
Inventory 103,667.00 77,969.00
Prepaid Expenses 27,745.00 10,490.00
Total Current Assets $ 186,956.00 $ 155,843.00

Non-Current Assets
Building $ 150,000.00 $ 150,000.00
Accumulated Depreciation, Building (120,000.00) (114,000.00)
Furniture & Equipment 60,000.00 60,000.00
Accumulated Depreciation, Furniture & Equipment (48,000.00) (36,000.00)
Land 190,000.00 190,000.00
Total Non-Current Assets $ 232,000.00 $ 250,000.00
TOTAL ASSETS $ 418,956.00 $ 405,843.00

LIABILITIES
Current Liabilities
Accounts Payable $ 77,307.00 $ 58,620.00
Dividends Payable 15,000.00 5,000.00
Unearned revenue 45,128.00 27,273.00
Bank Loan (due in the next year) 20,000.00 20,000.00
Total Current Liabilities $ 157,435.00 $ 110,893.00

Non-Current Liabilities
Bank Loan Payable $ 180,000.00 $ 200,000.00
Total Non-Currrent Liabilities $ 180,000.00 $ 200,000.00
TOTAL LIABILITIES $ 337,435.00 $ 310,893.00

SHAREHOLDER'S EQUITY
Common shares $ 30,000.00 $ 30,000.00
Retained Earnings 51,521.00 64,950.00
TOTAL SHAREHOLDER'S EQUITY $ 81,521.00 $ 94,950.00

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 418,956.00 $ 405,843.00

Part 2 - Ratios (24 marks)
Names of group members (please fill in):
Maria Jana Minela Ilustre
Joanna Fijer
Ana Sidro
Alannah Kessir

REMEMBER TO USE THE CORRECTED FIGURES WHEN CALCULATING THESE RATIOS TO AVOID PENALTY!
2020 2019
1.      Current ratio 1.19 1.41

2.      Quick ratio 0.35 0.61

3.      Accounts receivable turnover 103502.40 78641.20

155253.60 117961.80
4.18 4.57
times per year times per year
4.      Average collection period 87.29 79.81
days days

5.      Inventory turnover 1.85 1.50

times times

6.      Days to sell inventory 197.09 243.35

days days

7.      Debt to Equity ratio 2.30 1.94

8.      Gross profit ratio 35.00% 55.00%

9.      Profit margin 0.61% 15.11%

10.   Return on Equity 1.78% 31.12%

11.   Return on Assets 0.38% 6.89%

12.   Earnings per Share 0.05 0.99