- Perry Started Perry S Carpentry Company In 2020 With The Financial Year Ended On December 31 The Financial Statements O 1 (52.76 KiB) Viewed 124 times
Balance Sheet For the years ended as at December 31, 2020 2020 $ Assets Current Assets Cash Accounts Receivable, net Inventory Prepaid Insurance Total Current Assets 4,670 3,510 21,000 200 29,380 4,700 Non-current Assets Office Equipment Accumulated Depreciation - Office Equipment (130) 4,570 Vehicles Accumulated Depreciation - Vehicles 15,500 (500) 15,000 Land Building Total Non-current Assets 50,000 120,000 189,570 Total Assets CA 218,950 Liabilities Current Liabilities Accounts Payable Total Current Liabilities 2,010 2,010 Long-Term Liabilities Long-term bank loan Mortgage Payable Total Long-Term Liabilities 64,850 64,850 Total Liabilities 66,860 Owner's Equity G. Perry, Capital 152,090 Total Liabilities and Owner's Equity $ 218,950
a $ Perry's Carpentry Company uses a perpetual inventory system (With FIFO cost flow method). At the beginning of 2021, the trial balance of Perry's Carpentry Company is as follows: Perry's Carpentry Trial Balance January 1, 2021 Accounts Debit Credit Cash 4,670 Accounts Receivable 3,510 Inventory (200 units at $105) 21,000 Prepaid Insurance 200 Office Equipment 4,700 Accumulated Depreciation - Office Equipment Vehicles 15,500 Accumulated Depreciation - Vehicles 500 Land 50,000 Building 120,000 Accounts Payable 2,010 Long-term bank loan Mortgage Payable 64,850 G. Perry, Capital 152,090 Total 219.580 S 219.580 130 During 2021, Perry's Carpentry incurred transactions as follows: (a) Perry took out a long-term bank loan of $21,400 for the business in cash. Her finance provision is for the expansion of her business after the first year of suc success. (b) Paid advertising expense of $1,530 for 2021 in cash. (e) Purchase the 12-month insurance of $1,210 in cash (d) Purchased 1,073 units of inventory for $107,300. (e) Sold 400 units of inventory on account for $70,000 in cash. () Purchased vehicles for $26,100 with cash. (9) Paid Utilities $1,450; Telephone $1,070; Auto expense $2,030 in cash. (h) Purchased office equipment for $1,420 with cash.
Sold 665 units of inventory on account for $82,500. (k) Paid wages and salaries of $10,700. (1) Received a payment of $79,750 in cash from the customer at transaction (k) (m) Paid the supplier $107,550 in cash for the purchase at transaction (d) (m) Paid the mortgage $10,850 in cash (This transaction relates to the mortgage payable account) On December 31, 2021, Perry has additional information: (1) The bank charged the interest and bank fees of $4,510 for the year of 2020. This transaction had not been recorded. (2) As of December 31, Perry had $300 of Prepaid insurance remaining. (3) Later, after transaction (k), the customer discovered and returned 23 units of defective goods with sales of $2,900, but no accounting entries had been performed to record this transaction. (4) Depreciation on office equipment and vehicles are $390 and $1,000, respectively. REQUIREMENTS Part 1: Prepare financial statements (55 marks) 1. Journalize and post normal transactions from (a) to (n) to general ledger accounts in T- accounts. (13 marks) 2. Joumalize and post adjusting entries in the same T accounts as requirement #1 above. (4 marks) 3. Prepare an adjusted trial balance as at December 31, 2021. (5 marks) 4. Prepare an income statement, statement of owner's equity, and classified balance sheet for the year ended December 31, 2021. (Tax rate: 0% - There is no tax expense). (15 marks) 5. Joumalize and post-closing entries in the same T accounts in requirement #1 above. (3 marks) 6. Prepare a post-closing trial balance as at December 31, 2021. (5 marks) 7. Prepare the comparative financial statements including Income Statement and Balance Sheet (also called Statement of Profit or Loss and Statement of Financial Position) for the year ended 2020 & 2021 as the form provided in the next sheet. (Note: Office Equipment and
Vehicles are presented as net value of these assets - Cost - Accumulated Depreciation) (10 marks) Part 2: Analyze financial statements (45 marks) 8. Prepare the horizontal analysis for these comparative financial statements. (4 marks) 9. Prepare the vertical analysis for these financial statements. (4 marks) 10. Using the information from Requirement (#8) & (#9), complete these tasks as follows: - Comment on the management's ability to manage the accounts receivable over the past Iwo years. (3 marks) What is a possible explanation for the decrease in the Wages and Salaries expense? (3 marks) - Comment on the current ratio. (3 marks) 11. Perform Dupont Analysis. (8 marks) 12. Utilize all the above information to comment on the company's overall performance over the past two years. (20 marks)