Assignment #1 BADM 1050 Itroduction to Financial Accounting

Emily Nelson
1235217

(45 Marks) / Question #1 / Prepare a Statement of Income, Changes in Equity, and

a Classified Statemet of Financial Position.
Answers:

A. Statement of income; (8 Marks)

Jacquard Industries
Statement of Income
Month Ended Decemeber 31, 2022
Reveues
Service Revenue $60,000
Expenses
Salaries Expense $28,850
Rent Expense 17,250
Supplies Expense 16,650
Depreciation Expense 2,400
Intrest Expense 435 65,585
Net Loss $ -(5,585)

B. Statement of changes in equity; (5 Marks)

Jacquard Industries
Statement of Changes in Equity
Month Ended Decemeber 31, 2022
Common Shares Retained Earnings Total Equity
Balance, December 1 $0 $10,085 $ 10,085
Net Loss (5,585) (5,585)
Dividends Declared (1,000) (1, 000)
Issued Common Shares 10, 000 10, 000
Balance, December 31 $ 10, 000 $ 3,500 $ 13,500

C. Classified statement of financial position; (20 Marks)

Jacquard Industries
Statement of Changes in Equity
Decemeber 31, 2022
Assets
Cash $ 3,700
Accounts Recievable 9,100
Prepaid Rent 400
Supplies 600
Equipment 34,550
Accumulated Depreciation - Equipment (4,600)
Total Assets $43,750
Liabilities and Shareholder’s Equity
Liabilites
Accounts Payable $ 3,400
Deferred Revenue 2,250
Intrest Payable 435
Bank Loan Payable (due July 1, 2020) 21,750
Total Liabilities 27,835
Shareholder’s Equity
Common Shares 10,000
Retained Earnings 3,500
Total Shareholder’s Equity $ 13,500
Total Liabilities and Shareholder’s Equity $43,750

D. Closing journal entries (12 Marks)

Dec. 31 Service Revenue $60,000

Income Summary 60,000
Dec. 31 Salaries Expense 28,850
Rent Expense 17,250
Supplies Expense 16,650
Depreciation Expense 2,400
Intrest Expense 435
Income Summary $65,585
Dec. 31 Income Summary $12,500
Retained Earnings 12,500
Dec. 31 Retained Earings $1,000
Dividends Declares 1,000

(10 Marks) / Question #2 / Calculate the following ratios: Current ratio, Working
capital, Basic earnings per share, Price-earnings ratio, Debt to total assets.

A. Current Ratio
Current Ratio = Current Assets / Current Liabilities

Current Assets: Cash + Accounts Recievable

 = 147, 200 + 84, 500

= $231, 700

Current Liabilities: Other Current Liabilities + Accounts Payable + Salaries

Payable

= 22, 500 + 52, 000 + 19, 600

= $94, 100

= 231, 700 / 94, 100

= 2.4:1

B. Working Capital
Working Capital = Current Assets - Current Liabilities

= 231, 700 - 94, 100

= 137, 600

C. Basic Earnings Per Share

Basic Earnins Per Share = Income Available to Common Shareholders / Weighted Average
Number of Common Shares

= 174, 000 / 4, 000

= $43. 50

D. Price-Earnings Ratio
Price - Earnings Ratio = Market Price Per Share / Basic Earnings Per Share

= 65. 00 / 43. 50

= 1.5 times

E. Debt to Total Assets

Debt to Total Assets = Total Liabilities / Total Assets
Total Liabilities = Assets - Equity
= 500, 000 - 310, 900
= 189, 100
= 189, 100 / 500 000
= 37.8%
(30 Marks) / Question # 3 / Prepare The Adjusting Entries and Adjusting Trial
Balance at September 30.

A. Prepare the adjusting entries that should be made by Plover on September

30 (adjusting entries are made on a monthly basis).
I. Supplies Expense $1200

Supplies $1200

II. Prepaid Insurance $6,600

Cash $6,600

III. Depreciation Expense (16,200) / 5 x 6 / 2 $1,620

Accumulated Depreciation - Equipment $1,620

IV. Rent Unearned $500

Rent Revenue $500

V. Income Tax Expense $800

Income Tax Payable $800

B. Prepare an adjusted trial balance at September 30.

PLOVER CORPORATION

Trial Balance

September 30, 2022

Cash $5700

Supplies 1500

Prepaid Insurance 12,375

Equipment 16,200

Accumulated Depreication - Equipment 2,160

Accounts Payable $1,100

Defferred Revenue 1,200

Common Shares 10,000

Retained Earnings 18,925

Rent Revenue 6,860

Salaries Expense 1,150

(10 Marks) / Question # 4 / Prepare Adjusting Entries

A. Depreciation on equipment is $1,850.

Depreciation Expense $1850

Accumulated Depreciation - Equipment $1850

B. Interest incurred and owed on a loan but not paid or recorded is $680.

Interest Expense $680

Intrest Payable $680

C. There was a beginning balance of supplies of $450 and the company

purchased $760 of office supplies during the period. At the end of the year
$240 of supplies were on hand.

Supplies expense (450 + 760 - 240) $970

Supplies $970

D. Prepaid rent had a $5,300 normal balance prior to adjustment. By year end
$1,500 had expired.

Rent Expense $1500

Prepaid Rent $1500

E. Accrued salaries at year end were $1,900.

Salary Expense $1900

Salary Payable $1900