ACCT1501 Lecture Notes - Lecture 2: Balance Sheet, Financial Statement, Equity Method

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cyanalpaca20

11 Nov 2018

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Financial position & financial performance: understand the terms, format and function of the balance sheet & the income statement. A balance sheet always has: name of accounting entity, type of financial statement (e. g balance sheet, date, currency () Australian accounting standards board (cid:523)aasb(cid:524) (cid:494)presentation of financial statements(cid:495) requires at a minimum that these items be shown on the face of the balance sheet: Assets: cash and cash equivalents, trade and other receivables, biological assets. Investments accounted for using the equity method: other financial assets, tax assets, property, plant and equipment. Shareholder"s equity: contributed equity/issued capital, reserves, retained profits, minority interest/outside equity. Not all assets and liabilities are reported on the balance sheet: to be reported on balance sheet, assets and liabilities must meet, definition criteria, recognition criteria. If they meet a. but not b. they are disclosed in the financial statement notes.

Related Questions

1. Produce a balance sheet for a company that distinguishesbetween current and non-current assets and liabilities.
2. Create a balance sheet from a trial balance.
3. Create a comparison of net income based on different methods ofinventory accounting.
4. Analyze a statement of cash flows and show where each line itemcan be found or calculated from the other financialstatements.
5. Prepare a full analysis of key financial ratios for a companyand state conclusions about the financial strength of the companycompared to industry ratios.

Create a BalanceSheet from the trial balance:
		Debits	Credits	Classification

	Cash	300,000.00		Current asset

	Sales		(10,000,000.00)	Income statement

	Cost of Goods Sold	7,000,000.00		Income statement

	Selling Expenses	500,000.00		Income statement

	Other income		(50,000.00)	Income statement

	Administrative expenses	350,000.00		Income statement

	Interest Expenses	12,500.00		Income statement

	Land	300,000.00		non-current asset

	Building	2,000,000.00		non-current asset

	Long Term bond payable		(550,000.00)	non-current liability

	Accrued Liabilities		(50,000.00)	current- liability

	Accumulated Depreciation Buildings		(250,000.00)	non-current asset

	Equipment	750,000.00		non-current asset

	Receivables	100,000.00		current asset

	Allowance for doubtful accounts		(7,500.00)	current asset

	Accumulated depreciation equipment		(125,000.00)	non-current asset

	Common Stock		(200,000.00)	equity

	Payables		(115,000.00)	current Liability

	Inventories	200,000.00		current asset

	Prepaid Expenses	50,000.00		current asset

	Retained Earnings		(215,000.00)	equity



		11,562,500.00	(11,562,500.00)



Assets		Equity and Liabilities

Current Assets		Current Liabilities





Total Current Assets	-	Total Current Liabilities	-




		Total long term Liabilities	-

Total property plant and equipment	-






		Total Equity	-


Total Assets	-	Total Equity and liabilities	-

ochreelephant833

Happy Hamburger Company

Below are the balance sheet and income statement for HappyHamburger Company.

Happy Hamburger Company
Balance Sheet as of December 31, 20XX
Assets		Liabilities and Shareholder Equity
Cash	78,000	Accounts payable	136,000
Accounts Receivable	336,500	Current portion of debt	82,500
Inventories	225,000	Other current liabilities	114,000
Total current assets	639,500	Total current liabilities	332,500
Net fixed assets	310,000	Long-term debt	252,000
Total assets	949,500	Total Liabilities	584,500
		Common equity	365,000
		Total Liabilities & Equity	949,500

Happy Hamburger Company
Income Statement for the year ending December 31,20XX
Sales	1,704,560
Cost of goods sold	1,489,000
Selling, general and administrative expenses	152,000
Earnings before interest and taxes (EBIT)	63,560
Interest expense	26,200
Earnings before taxes (EBT)	37,360
Federal and state income taxes (40%)	14,944
Net Income	22,416

Required:

Calculate the following ratios for the company.

Explain whether the company is doing better or worse than theindustry average for each ratio.

Note: Formula must be provided foreach ratio

	Happy Hamburger	Industry Average
Current ratio		1.7
Days sales outstanding (based on 365 day year)		36 days
Inventory turnover		7.3
Fixed asset turnover		12.1
Total asset turnover		3.00
Return on sales		3.20%
Return on assets		3.60%
Return on equity		9.00%
Debt ratio		71%

skyhorse437

In addition to presenting the computed answers, please also discuss how you arrived at each answers the accounting problem asks. The accounting problem presents a companyâs balance sheet and income statement. The Diamond Gem Cleaning and Maintenance Service Company is in the business of contracting its cleaning and maintenance services to office buildings. The balance sheet and income statement have blank lines. Determine the values that would be appropriate for each blank line. Provide a narrative of how you arrived at each value. In doing so, explain the account being valued and its relationship to the other financial data. For example, if the accounts payable line was missing, explain that you can derive its value based on knowing all the other values of the current liabilities section. Then explain what an account liability is, as well as why it would belong in the current liabilities section of the balance sheet

Please refer to the income statement and balance sheet of the Diamond Gem Cleaning and Maintenance Service Company available down:

Superior papers will mention and explain the following elements when responding to the assignment question:

Provide correct balances for the blank financial account lines.

Provide a narrative about how the values were determined.

Provide a definition and explanation of each account line that was completed

Balance sheet
ASSETS

CURRENT ASSETS

Cash		225,971
Contracts receivables		[__A____]
Other assets		162,847

Total current assets		893,868

LONG TERM ASSETS

Equipment		[___B____]

TOTAL ASSETS		1,180,660

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable		[__C____]
Line of credit		85,000
Accrued expenses		72,495
Income tax payable		46,660
Current portion of notes payable		31,747
Deferred income taxes		78,460

Total current liabilities		571,697

LONG TERM LIABILITIES
Notes payable (long term)		172,467

TOTAL LIABILITIES		744,164

STOCKHOLDERS' EQUITY

Common stock	62,000
Additional paid-in capital	63,862

Retained Earnings	[___D___]

Total stockholders' equity		436,496

TOTAL LIABILITIES AND STOCKHOLDERS EQUITY		[___E___]

Income sheet

Contract Revenues	5,146,862

Contract Costs	[___F____]

Gross Profit	614,343

General and Administrative Expenses	322,356

Operating Income	291,987

Other Expense	25,770

Income Before Provision for Income Taxes	266,217

Provision for Income Taxes	[__G____]

Net Income	150,767


Retained Earnings, Beginning Balance	[__H____]

Net Income	150,767

Retained Earnings, Ending Balance	310,634

cyanmosquito456

ACCT1501 Lecture Notes - Lecture 2: Balance Sheet, Financial Statement, Equity Method

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