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    Revised Balance Sheet and Income Statement

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    1. Assume you are working for MS. Countess, CPA. Using your own template, enter the changes, if any, to the balance sheet accounts that each of the above items require. Remember to maintain the integrity of the balance sheet by maintaining the balance sheet equation on every row. (perform an equality check). Item # 1 has already been entered for you.

    2.Prepare a revised balanced sheet as of December 31, 2000. Be sure to include subtotals for current assets, fixed assets, current liabilities, and long-term liabilities (if needed)

    3. Prepare a revised income statement for the year ending December 31, 2000.

    4. Assume the role of the loan officer in this case. Apply to Upside-Down Ski School the Metropolis Commercial Bank's policy for qualifying loan applicants. What decision should jacqueline Cash make? Write a memo to Mr. Glib information him of your decision. Be sure to reference specific balance sheet and income statement information in support of your decision.

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    Solution Preview

    Please see the attached file.

    1. The effects on the Balance Sheet are recorded below
    Assets = Liabilities + Equity Check
    Accounts Prepaid Ski Accounts Unearned Lease Note Bank Loan Contributed Retained
    Cash Receivable Advertising Insurance Supplies Land Equipment Payable Revenue Liability Payable Payable Capital Earnings
    Existing 30,000 70,000 50,000 150,000 150,000 40,000 100,000 150,000 160,000 -
    Point 1 (4,000) (4,000) -
    Point 2 3,500 3,500 -
    Point 3 (50,000) (50,000) -
    Point 4 (22,000) (22,000) -
    Point 5 4,000 4,000 -
    Point 6 3,000 (3,000) -
    Point 7 18,000 (18,000) -
    Point 8 25,000 ...

    Solution Summary

    The solution explains how to prepare a revised balance sheet and income statement and use that to make a loan decision.