Assets and Liabilities Fall Assignment

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Assets and Liabilities Fall Assignment

Write up the asset, capital and liability accounts in the books of D. Gough to record the following transactions:

2016

June

1 Started business with £16,000 in the bank.

2 Bought van paying by cheque £6,400.

5 Bought office fixtures £900 on time from Old Ltd.

8 Bought van on time from Carton Cars Ltd £7,100.

12 Took £180 out of the bank and put it into the cash till.

15 Bought office fixtures paying by cash £120.

19 Paid Carton Cars Ltd by Internet transfer from the bank account.

21 A loan of £500 cash is received from B. Berry.

25 Paid £400 of the cash in hand into the bank account.

30 Bought more office fixtures paying with the business debit card £480.

What has been the effect of this practice on accounting? What is its relation to the accrual system? What influence has it had on accounting entries and methodology?

Maserati SpA purchased a new machine for its assembly process on August 1, 2019. The cost of this machine was€150,000. The company estimated that the machine would have a residual value of €24,000 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 21,000 hours. Year-end is December 31. Instructions Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. A. Straight-line depreciation for 2019.b. Activity method for 2020, assuming that machine usage was 800 hours. c. Sum-of-the-years’-digits for 2020.d. Double-declining-balance for 2020.

(a) The current ratio of a company is 6:1 and its acid-test ratio are 1:1. If the inventories and prepaid items amount to $463,000, what is the amount of current liabilities?
Current Liabilities $enter current liabilities in dollars
(b) A company had an average inventory last year of $209,000 and its inventory turnover was 6. If sales volume and unit cost remain the same this year as last and inventory turnover is 8 this year, what will average inventory have to be during the current year? (Round answer to 0 decimal places, e.g. 125.)
Average Inventory $enter the average inventory in dollars rounded to 0 decimal places

The following is a December 31, 2021, post-closing trial balance for Almway Corporation.

Account Title Debits Credits
Cash $ 53,000
Investment in equity securities 118,000
Accounts receivable 64,000
Inventory 204,000
Prepaid insurance (for the next 9 months) 8,000
Land 98,000
Buildings 424,000
Accumulated depreciation—buildings $ 104,000
Equipment 114,000
Accumulated depreciation—equipment 64,000
Patent (net) 14,000
Accounts payable 83,000
Notes payable 142,000
Interest payable 24,000
Bonds Payable 244,000
Common stock 312,000
Retained earnings 124,000
Totals $ 1,097,000 $ 1,097,000

Additional information:

  1. The investment in equity securities account includes an investment in common stock of another corporation of $34,000 which management intends to hold for at least three years. The balance of these investments is intended to be sold in the coming year.
  2. The land account includes land which cost $29,000 that the company has not used and is currently listed for sale.
  3. The cash account includes $19,000 restricted in a fund to pay bonds payable that mature in 2024 and $27,000restricted in a three-month Treasury bill.
  4. The notes payable account consists of the following:
  5. a $34,000 note due in six months.
  6. a $54,000 note due in six years.
  7. a $54,000 note due in five annual instalments of $10,800 each, with the next instalment due February 15, 2022.
  8. The $64,000 balance in accounts receivable is net of an allowance for uncollectible accounts of $6,000.
  9. The common stock account represents 104,000 shares of no-par value common stock issued and outstanding. The corporation has 600,000 shares authorized.

Required:
Prepare a classified balance sheet for the Almway Corporation at December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

P1-4A Mark Miller started his own delivery service, Miller Deliveries, on June 1,2008. The following transactions occurred during the month of June. June 1 Mark invested $10,000 cash in the business. 2 Purchased a used van for deliveries for $12,000. Mark paid $2,000 cash and signed a note payable for the remaining balance. 3 Paid $500 for office rent for the month. 5 Performed $4,400 of services on account. 9 Withdrew $200 cash for personal use. 12 Purchased supplies for $150 on account. 15 Received a cash payment of $1,250 for services provided on June 5. 17 Purchased gasoline for $100 on account. 20 Received a cash payment of $1,500 for services provided. 23 Made a cash payment of $500 on the note payable. 26 Paid $250 for utilities. 29 Paid for the gasoline purchased on account on June 17. 30 Paid $1,000 for employee salaries.

13. An item can be reported as an asset if it passes three of the following tests. Select “yes” for these and “no” for the others.

(a) Item is valuable. [yes/no]

(b) Item is located in a building owned by the entity. [yes/no]

(c) Item is used by the entity. [yes/no]

(d) The entity has ordered the item. [yes/no]

(e) Item was acquired at a measurable cost. [yes/no]

(f) Item is owned or controlled by the entity. [yes/no]

Imperial Electronics Ltd.

Imperial Electronics Ltd is a publicly owned company with 100,000 common shares outstanding. At the last executive committee meeting, the CEO of the company informed the board members of the economic slowdown that she anticipated during the next several years. She also told them that several US firms were considering becoming more aggressive in the industry, particularly in the Canadian Market.

Because of these external threats, management of Imperial Electronics Ltd. Anticipates more difficult times ahead. For this reason, company management is now trying to watch its financial ratios more closely in order to keep the firm under control.

On the basis of the information contained in the company’s financial statements, calculate and comment on Imperial Electronics Ltd.’s December 31, 2009, financial ratios by comparing them to the industry average. The common shares are valued on the stock market at $120.00.

Calculate the following ratios, compare to industry (included below) and comment whether Imperial Electronics is doing better or worse than industry.

a) Current ratio

b) Quick ratio

c) Debt to total assets

d) Debt to equity

e) Times interest earned

f) Fixed charges coverage

g) Average collection period

h) Inventory turnover

i) Capital assets turnover

j) Total assets turnover

k) Return on total assets

l) Return on equity

Industry comparative ratios

a) Current ratio 1.95 times

b) Quick ratio 1.03 times

c) Debt to total assets 55%

d) Debt to equity 1.21 times

e) Times interest earned 6.43 times

f) Fixed charges coverage 4.51 times

g) Average collection period 35.00 days

h) Inventory turnover 7.00 times

i) Capital assets turnover 5.10 times

j) Total assets turnover 2.90 times

k) Return on total assets 6.00%

l) Return on equity 21.00%

Total Assessment 1 length should be 1500 – 2000 words. You must accurately reference all of your external sources of information Your task is to research and write the answers to each of the following questions. Answers should exceed 100 words but no more than 200 words for each question: 1. Explain the major principles of accounting. 2. What are financial statements? 3. Explain what cash flow is. 4. List three (3) different communication processes or methods which could be used within a company. 5. What are the various reports which need to be lodged with the Australian Security and Investment Commission to meet compliance requirements and legislative responsibilities? 6. Explain what is meant by the following: a. Cost of capital b. Capital structure c. Working capital 7. What is meant by investing and finance decisions? 8. What is the goal of financial resource management? 9. Outline the key principles of finance that relate to most organization’s operations. 10. What is meant by risk and return?

Natalie Koebel spent much of her childhood learning the art of cookie-making from her grandmother. They passed many happy hours mastering every type of cookie imaginable and later creating new recipes that were both healthy and delicious. Now at the start of her second year in college, Natalie is investigating various possibilities for starting her own business as part of the requirements of the entrepreneurship program in which she is enrolled. A long-time friend insists that Natalie has to somehow include cookies in her business plan.

After a series of brainstorming sessions, Natalie settles on the idea of operating a cookie making school. She will start on a part-time basis and offer her services in people’s homes. Now that she has started thinking about it, the possibilities seem endless. During the fall, she will concentrate on holiday cookies. She will offer individual lessons and group sessions (which will probably be more entertainment than education for the participants). Natalie also decides to include children in her target market. The first difficult decision is coming up with the perfect name for her business. In the end, she settles on “Cookie Creations” and then moves on to more important issues.

Instructions

(a) What form of business organization—proprietorship, partnership, or corporation—do you recommend that Natalie use for her business? Discuss the benefits and weaknesses of each form and give the reasons for your choice.

(b) Will Natalie need accounting information? If yes, what information will she need and why? How often will she need this information?

(c) Identify specific asset, liability, and equity accounts that Cookie Creations will likely use to record its business transactions.

(d) Should Natalie open a separate bank account for the business? Why or why not?

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Reference no: EM132069492

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