Explore BrainMass

# Financial Analysis of the Giovanni Company

Not what you're looking for? Search our solutions OR ask your own Custom question.

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Can you tell me the what the ratios would be for the return on assets, debt ratio, profit margin ratio, and current ratio for the attached problem? Also, can you provide me the correct formulas for them? I would like for you to prepare the financial statements as well.

The adjusted trial balance for Giovanni Co. as of December 31, 2011, follows:

Giovanni Co.
December 31, 2011

No. Account Title Debit Credit
101 Cash \$6,400
104 Short-term investments 10,200
126 Supplies 3,600
128 Prepaid insurance 800
167 Equipment 18,000
168 Accumulated depreciation-Equipment \$3,000
173 Building 90,000
174 Accumulated depreciation-Building 9,000
183 Land 28,500
201 Accounts payable 2,500
203 Interest payable 1,400
208 Rent payable 200
210 Wages payable 1,180
213 Property taxes payable 2,330
233 Unearned professional fees 650
251 Long-term notes payable 32,000
301 J. Giovanni, Capital 91,800
302 J. Giovanni, Withdrawals 6,000
401 Professional fees earned 47,000
406 Rent earned 3,600
407 Dividends earned 500
409 Interest earned 1,120
606 Depreciation expense-Building 2,000
612 Depreciation expense-Equipment 1,000
623 Wages expense 17,500
633 Interest expense 1,200
637 Insurance expense 1,425
640 Rent expense 1,800
652 Supplies expense 900
682 Postage expense 310
683 Property taxes expense 3,825
684 Repairs expense 579
688 Telephone expense 421
690 Utilities expense 1,820
Totals \$196,280 \$196,280

J. Giovanni invested \$30,000 cash in the business during year 2011 (the December 31, 2010, credit balance of the J. Giovanni, Capital account was \$61,800). Giovanni Company is required to make a \$6,400 payment on its long-term notes payable during 2012.

1. Prepare the income statement and the statement of owner's equity for the calendar year 2011 and the classified balance sheet at December 31, 2011.

2. Prepare necessary closing entries at December 31, 2011.

3. Use the information in the financial statements to calculate these ratios: (a) return on assets (total assets at December 31, 2010, was \$150,000), (b) debt ratio, (c) profit margin ratio (use total revenues as the denominator), and (d) current ratio.

*Check: (1) Total assets (12/31/2011), \$145,500; Net income, \$19,440

#### Solution Preview

For your review, I have attached a formatted MS Excel spreadsheet containing ...

#### Solution Summary

Can you tell me the what the ratios would be for the return on assets, debt ratio, profit margin ratio, and current ratio for the attached problem? Also, can you provide me the correct formulas for them? I would like for you to prepare the financial statements as well.

The adjusted trial balance for Giovanni Co. as of December 31, 2011, follows:

Giovanni Co.
December 31, 2011

No. Account Title Debit Credit
101 Cash \$6,400
104 Short-term investments 10,200
126 Supplies 3,600
128 Prepaid insurance 800
167 Equipment 18,000
168 Accumulated depreciation-Equipment \$3,000
173 Building 90,000
174 Accumulated depreciation-Building 9,000
183 Land 28,500
201 Accounts payable 2,500
203 Interest payable 1,400
208 Rent payable 200
210 Wages payable 1,180
213 Property taxes payable 2,330
233 Unearned professional fees 650
251 Long-term notes payable 32,000
301 J. Giovanni, Capital 91,800
302 J. Giovanni, Withdrawals 6,000
401 Professional fees earned 47,000
406 Rent earned 3,600
407 Dividends earned 500
409 Interest earned 1,120
606 Depreciation expense-Building 2,000
612 Depreciation expense-Equipment 1,000
623 Wages expense 17,500
633 Interest expense 1,200
637 Insurance expense 1,425
640 Rent expense 1,800
652 Supplies expense 900
682 Postage expense 310
683 Property taxes expense 3,825
684 Repairs expense 579
688 Telephone expense 421
690 Utilities expense 1,820
Totals \$196,280 \$196,280

J. Giovanni invested \$30,000 cash in the business during year 2011 (the December 31, 2010, credit balance of the J. Giovanni, Capital account was \$61,800). Giovanni Company is required to make a \$6,400 payment on its long-term notes payable during 2012.

1. Prepare the income statement and the statement of owner's equity for the calendar year 2011 and the classified balance sheet at December 31, 2011.

2. Prepare necessary closing entries at December 31, 2011.

3. Use the information in the financial statements to calculate these ratios: (a) return on assets (total assets at December 31, 2010, was \$150,000), (b) debt ratio, (c) profit margin ratio (use total revenues as the denominator), and (d) current ratio.

*Check: (1) Total assets (12/31/2011), \$145,500; Net income, \$19,440

\$2.49