Requirements: Use the following information to prepare the case.1. Record all transactions using the financial transactionhorizontal model. Use the example template below to format yourtransaction analysis Hint: a. Show ending balance values for eachaccount 2. Complete the following requirements: Format an incomestatement, balance sheet, and statement of cash flows for NCP forthe period ending Dec 31, 2013. Compute the following ratios: NetProfit Margin Quick ratio. QR = Cash + cash equivalents(receivables) / CL Asset turnover ratio (use ending total assetsbalance, not average assets) Provide a qualitative evaluation ofthese three ratios. Include in your analysis these items: What doeseach illustrate, specifically, to CHâs performance? What is theimpact of having just one month of business on any/all of theratios? Based on the given information, what is the reliability ofthese values, and what would strength the signal provided by theratios? CH, Inc., an electrical contractor is formed in the lastmonth of December. The following transactions are completed inDecember. It is determined that the truck asset has an expecteduseful life of 5 years with $2000 salvage value, and the firm willuse the straight-line method to determine depreciation. Thetransactions are listed as of the date of the transaction: 1 Toestablish the company, Owner transfers $56,000 cash from savings toa business checking account, CH, Inc 2. Owner purchases a usedtruck for the business for $20,000, paying $10,000 in cash with theremaining balance using a note payable, to be paid within 12months. 3. Rents office space for $800 rent for the month ofDecember 4. Purchases $14,000 of electrical equipment, paying$3,200 in cash, with the balance to be paid within 60 days 5.Purchases $900 of office supplies using cash 6. Completed a job andcollected $1,000 cash for the work 7 Purchased $3800 of electricalequipment on credit 8 Completed a $4000 job, and invoiced theclient. Used $1500 of electrical supplies to complete this work. 9Purchased $500 of office supplies on credit 10 Paid $3800 cash forthe equipment purchases on 12/8 11 Billed a client $1200 for workcompleted, payment due in 30 days. Used $250 of electrical suppliesto complete this work. 12 Collected $4,000 cash for work completedon 12/15 13 Paid office wages of $12,000 for the month 14 Paid $440for December utilities 15 Owner withdrew $700 cash for DecemberSalary 16 Recorded December depreciation expense on truck
Requirements: Use the following information to prepare the case.1. Record all transactions using the financial transactionhorizontal model. Use the example template below to format yourtransaction analysis Hint: a. Show ending balance values for eachaccount 2. Complete the following requirements: Format an incomestatement, balance sheet, and statement of cash flows for NCP forthe period ending Dec 31, 2013. Compute the following ratios: NetProfit Margin Quick ratio. QR = Cash + cash equivalents(receivables) / CL Asset turnover ratio (use ending total assetsbalance, not average assets) Provide a qualitative evaluation ofthese three ratios. Include in your analysis these items: What doeseach illustrate, specifically, to CHâs performance? What is theimpact of having just one month of business on any/all of theratios? Based on the given information, what is the reliability ofthese values, and what would strength the signal provided by theratios? CH, Inc., an electrical contractor is formed in the lastmonth of December. The following transactions are completed inDecember. It is determined that the truck asset has an expecteduseful life of 5 years with $2000 salvage value, and the firm willuse the straight-line method to determine depreciation. Thetransactions are listed as of the date of the transaction: 1 Toestablish the company, Owner transfers $56,000 cash from savings toa business checking account, CH, Inc 2. Owner purchases a usedtruck for the business for $20,000, paying $10,000 in cash with theremaining balance using a note payable, to be paid within 12months. 3. Rents office space for $800 rent for the month ofDecember 4. Purchases $14,000 of electrical equipment, paying$3,200 in cash, with the balance to be paid within 60 days 5.Purchases $900 of office supplies using cash 6. Completed a job andcollected $1,000 cash for the work 7 Purchased $3800 of electricalequipment on credit 8 Completed a $4000 job, and invoiced theclient. Used $1500 of electrical supplies to complete this work. 9Purchased $500 of office supplies on credit 10 Paid $3800 cash forthe equipment purchases on 12/8 11 Billed a client $1200 for workcompleted, payment due in 30 days. Used $250 of electrical suppliesto complete this work. 12 Collected $4,000 cash for work completedon 12/15 13 Paid office wages of $12,000 for the month 14 Paid $440for December utilities 15 Owner withdrew $700 cash for DecemberSalary 16 Recorded December depreciation expense on truck
