Purchase Solution

Creating Financial Statements

Not what you're looking for?

Ask Custom Question

I have some examples of the type of problem I need help understanding and how to put all the components together in order to solve a problem in accounting. I need help with the journal entries and adjusting entries. Also, with which of the entries goes on which financial statement...the balance sheet or the income statement? I have to figure out how to put it into Peachtree, but Excel is fine...I just need help to make the entries and make the statements.

---
Accounting

You have recently opened a new business. You buy and sell used computers and parts. For ease and convenience, you decided to organize the business as an unincorporated sole proprietorship. You have decided to approach a local bank for additional funding. You are requesting a low-interest loan of $500,000 to be repaid in 10 years. The bank has requested that you submit current financial statements in addition to the loan application form.

General Facts and Information

The business opened for business on November 1, 2005. The company uses the perpetual method to account for inventory. All long-lived assets are depreciated over a useful life of 5 years with no salvage value. You adhere to the half-month convention for depreciation. Under this convention, items acquired on or before the fifteenth day of the month will be depreciated for the entire month. No depreciation will be recorded in the month of purchase for items acquired after the 15th.

Below is a list of events and transactions for the month of November.

DATE TRANSACTION / EVENT

1-Nov Invested $25,000 in cash and inventory parts valued at $30,000.

3-Nov Signed office lease for five years. Paid six months' rent, $3,000.
(Covers the period, November - April).

4-Nov Purchased office furniture, $5,000.

10-Nov Purchase additional inventory on account, terms n/30, $3,000.

11-Nov Hired store manager and agreed to pay salary of $2,000 per month.
Manager begins working on November 15; initial pay date = December 1.

16-Nov Sold inventory to customer, $3,000. Cost of inventory sold = $2,000.

18-Nov Sold inventory to customer on account, terms n/30, $6,000. Cost of inventory
sold = $4,000.

20-Nov Received utilities bill, $1,000. Bill not due until December.

21-Nov Purchased office equipment, $8,000. Paid half down and financed
remaining balance with a 3-year, 12% note.

25-Nov Customer returned merchandise previously purchased on account, $500.
Cost of inventory returned, $200.

29-Nov Withdrew cash for personal use, $1,000.

Based on the information provided, complete the following requirements using the Peachtree Accounting Software:

1. Prepare journal entries for the November transactions, including adjusting entries.

2. Prepare a single-step income statement, in good form.

3. Prepare a classified balance sheet, in good form.

4. Provide responses to the questions/statements below.

a. What was the profit margin for the month of November?

b. What is the balance in the Capital account, after closing?

c. Compute the current ratio and interpret the result.

d. Based on the information provided, should the bank loan the company the funds requested? Why or why not?
---

Attachments
Purchase this Solution
Purchase this Solution
Free BrainMass Quizzes
Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Motivation

This tests some key elements of major motivation theories.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

View More Free Quizzes
Related BrainMass Solutions

  • Creating Financial Statements, and Closing Entries

    502588 Creating Financial Statements and Closing Entries The following requirements are for the balance sheet of Fugazy Investment Advisers, Inc. which is attached. 1.

  • Create all four financial statements

    411109 Create all four financial statements Creating financial statements Accounts Payable 20,000 Account Receivable 60,000 Capital Stock

  • Discuss which financial management practices are most effect

    421507 Most Effective Financial Management Practices Discuss which financial management practices are most effective in creating and monitoring an operational budget and discuss which financial management practices are the least effective in creating

  • PPA 602

    Analyzing Financial Statements and Budgets Try and think of the financial statements and budgets as a means for outlining the core attributes for creating a plan that works for the long-term than the short-term.

  • Creating and Using Common-Size Financial Statements

    574904 Creating and Using Common-Size Financial Statements (1) Describe a common-size financial statement. Explain how one is prepared.

  • Financial Statement Footnotes

    552536 Financial Statement Footnotes Would investors say that footnotes are important to the financial statements? Explain. They are nothing short of critical.

  • Financial Management

    Write an e-mail to your new employee explaining the components and the process of creating an annual report. Focus strongly on how accounting inputs are formulated into financial reports and statements for the organization.

  • International Accounting Standards

    However, when both separate and consolidated financial statements for the parent are presented in a single financial report, segment information need be presented only on the basis of the consolidated financial statements. 2) On August 18, 2005

  • Financial and Managerial Accounting Differences

    Your tutorial is 194 words and describes financial and managerial accounting and gives five uses for financial statements. Your tutorial is 194 words and describes financial and managerial accounting and gives five uses for financial statements.

  • This post addresses the goal of SOX and related issues.

    The goal of SOX is to ensure that companies are creating financial statements that are transparent, which protects the investors.

View More Related Solutions