Adjusted Trial Balance Account Name Debit Credit Debit Credit cash $ 35,000.00 $
ID: 2426193 • Letter: A
Question
Adjusted Trial Balance
Account Name
Debit
Credit
Debit
Credit
cash
$ 35,000.00
$ 35,000.00
accounts receivable
$ 5,600.00
$ 6,689.00
food inventory
$ 21,000.00
$ 21,000.00
merchandise inventory
$ 62,500.00
$ 62,500.00
prepaids
$ 3,400.00
$ 7,500.00
computers
$ 30,000.00
$ 30,000.00
accumulated amort-computers
$ 12,000.00
$ 18,000.00
bakery equipment
$ 90,000.00
$ 90,000.00
accumulated amort-bakery eqpmt
$ 18,000.00
$ 27,000.00
furniture & fixtures
$ 150,000.00
$ 150,000.00
accumulated amort-furniture
$ 15,000.00
$ 22,500.00
accounts payable
$ 18,000.00
$ 18,000.00
accrued liabilities
$ 1,700.00
interest payable
$ 17,600.00
dividend payable
$ 5,000.00
long term loan
$ 220,000.00
$ 220,000.00
common shares
$ 50,000.00
$ 50,000.00
retained earnings
$ 22,000.00
$ 22,000.00
food revenue
$ 468,500.00
$ 469,589.00
internet revenue
$ 127,000.00
$ 127,000.00
merchandise revenue
$ 103,000.00
$ 103,000.00
food expense
$ 240,000.00
$ 240,000.00
internet expense
$ 54,000.00
$ 54,000.00
electricity expense
$ 65,000.00
$ 65,400.00
telephone expense
$ 20,000.00
$ 20,400.00
interest expense
$ 17,600.00
salary expense
$ 200,000.00
$ 200,900.00
insurance expense
$ 9,000.00
$ 4,900.00
supplies expense
$ 8,000.00
$ 8,000.00
depreciation expense
$ 22,500.00
rent expense
$ 60,000.00
$ 60,000.00
dividend expense
$ 5,000.00
$ 1,053,500.00
$1,053,500.00
$1,101,389.00
$1,101,389.00
INCOME STATEMENT
Income:
food revenue
$ 469,589.00
internet revenue
$ 127,000.00
merchandise revenue
$ 103,000.00
$699,589.00
Expenses:
food expense
$ 240,000.00
internet expense
$ 54,000.00
electricity expense
$ 65,400.00
telephone expense
$ 20,400.00
salary expense
$ 200,900.00
insurance expense
$ 4,900.00
supplies expense
$ 8,000.00
depreciation expense
$ 22,500.00
rent expense
$ 60,000.00
$676,100.00
Operating Income
$ 23,489.00
Interest expense
$ 17,600.00
Net Income
$ 5,889.00
BALANCE SHEET
ASSETS
LIABILITIES
Current Assets:
Current liabilities:
Cash
$ 35,000.00
Accounts payable
$18,000.00
Accounts receivable
$ 6,689.00
accrued liabilities
$ 1,700.00
Food inventory
$ 21,000.00
interest payable
$17,600.00
Merchandise inventory
$ 62,500.00
dividend payable
$ 5,000.00
$ 42,300.00
Prepaids
$ 7,500.00
$132,689.00
Long term liabilities:
Fixed Assets:
Long term loan
$220,000.00
Computers
$ 30,000.00
Equity:
Less accumulated depn
$ 18,000.00
$ 12,000.00
Common Shares
$50,000.00
Bakery equipment
$ 90,000.00
Retained earnings
$22,889.00
$ 72,889.00
Less accumulated depn
$ 27,000.00
$ 63,000.00
Furniture and fixtures
$150,000.00
Less accumulated depn
$ 22,500.00
$127,500.00
$335,189.00
$335,189.00
o assess the financial reporting landscape, considering the user needs, constraints, and business environment;
o identify the issues;
o analyze the issues (qualitatively and quantitatively); and
o provide a recommendation for each issue identified in the case.
Adjusted Trial Balance
Account Name
Debit
Credit
Debit
Credit
cash
$ 35,000.00
$ 35,000.00
accounts receivable
$ 5,600.00
$ 6,689.00
food inventory
$ 21,000.00
$ 21,000.00
merchandise inventory
$ 62,500.00
$ 62,500.00
prepaids
$ 3,400.00
$ 7,500.00
computers
$ 30,000.00
$ 30,000.00
accumulated amort-computers
$ 12,000.00
$ 18,000.00
bakery equipment
$ 90,000.00
$ 90,000.00
accumulated amort-bakery eqpmt
$ 18,000.00
$ 27,000.00
furniture & fixtures
$ 150,000.00
$ 150,000.00
accumulated amort-furniture
$ 15,000.00
$ 22,500.00
accounts payable
$ 18,000.00
$ 18,000.00
accrued liabilities
$ 1,700.00
interest payable
$ 17,600.00
dividend payable
$ 5,000.00
long term loan
$ 220,000.00
$ 220,000.00
common shares
$ 50,000.00
$ 50,000.00
retained earnings
$ 22,000.00
$ 22,000.00
food revenue
$ 468,500.00
$ 469,589.00
internet revenue
$ 127,000.00
$ 127,000.00
merchandise revenue
$ 103,000.00
$ 103,000.00
food expense
$ 240,000.00
$ 240,000.00
internet expense
$ 54,000.00
$ 54,000.00
electricity expense
$ 65,000.00
$ 65,400.00
telephone expense
$ 20,000.00
$ 20,400.00
interest expense
$ 17,600.00
salary expense
$ 200,000.00
$ 200,900.00
insurance expense
$ 9,000.00
$ 4,900.00
supplies expense
$ 8,000.00
$ 8,000.00
depreciation expense
$ 22,500.00
rent expense
$ 60,000.00
$ 60,000.00
dividend expense
$ 5,000.00
$ 1,053,500.00
$1,053,500.00
$1,101,389.00
$1,101,389.00
INCOME STATEMENT
Income:
food revenue
$ 469,589.00
internet revenue
$ 127,000.00
merchandise revenue
$ 103,000.00
$699,589.00
Expenses:
food expense
$ 240,000.00
internet expense
$ 54,000.00
electricity expense
$ 65,400.00
telephone expense
$ 20,400.00
salary expense
$ 200,900.00
insurance expense
$ 4,900.00
supplies expense
$ 8,000.00
depreciation expense
$ 22,500.00
rent expense
$ 60,000.00
$676,100.00
Operating Income
$ 23,489.00
Interest expense
$ 17,600.00
Net Income
$ 5,889.00
Explanation / Answer
Key Ratios Debt Equity Ratio Conclusion Debt Equity Ratio $220,000.00 $50,000.00 4.4 High debt indicates higher interest cost & High risk Current asset Current Liabilities Ratio Current Ratio $132,689.00 $42,300.00 3.136855792 Higher currnet ratio indicates high capability to pay back its debts Current asset- Inventory Current Liabilities Ratio Quick Ratio $49,189.00 $42,300.00 1.16286052 Higher quick ratio indicates better position of company. However in thic case, High amount stuck in stock Sales Inventory Ratio Stock Turnover ratio Food $469,589.00 $21,000.00 22.36138095 Higher inventory tirnover ratio, the better Merchandise $103,000.00 $62,500.00 1.648 Higher inventory tirnover ratio, the better. Low in Merchandise Business. Stock to be kept lower for merchandise cosndidering demand Stock Turnover days No of days Stock Turnover ratio Stock days Food 365 22.36138095 16.32278439 Food is fast moving item Merchandise 365 1.648 221.4805825 Merchandise is slow moving item Net income Equity ROE (%) Return on Equity 5889.00 50000.00 11.778 ROE is 11.778% Net profit Net Sales NP Margin Net Profit Margin 5889 699589 0.841779959 Higher net profit margin, Better. It is lower
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