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# Financial Statements

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Problem 1: Basic Financial Statements
Using the data presented below for Conica Inc.: 2009 2008
Sales \$5,500,000 \$4,250,000
Cost of Goods 3,300,000 2,550,000
Depreciation 34,000 30,000
Selling and G&A Expenses 765,000 632,000
Fixed Expenses 100,000 100,000
Lease Expense 55,000 55,000
Interest Expense 130,000 110,000
Tax Rate 35.00% 30.00%
Shares Outstanding 75,000 65,000
Cash 84,000 48,000
Marketable Securities 37,000 32,000
Accounts Receivable 370,000 347,000
Inventory 870,000 715,000
Prepaid Expenses 55,000 37,000
Plant & Equipment 5,170,000 4,910,000
Accumulated Depreciation 170,000 136,000
Long Term Investments 350,000 270,000
Accounts Payable 380,000 300,000
Notes Payable 44,000 25,000
Accrued Expenses 102,000 75,000
Other Current Liabilities 140,000 136,000
Long-term Debt 3,220,000 3,122,000
Common Stock 1,550,000 1,300,000
Retained Earnings 758,000 723,000

a. Make Conica's income statement and balance sheet using formulas wherever possible. Each statement should be on a separate worksheet. Improve the readability of the data by selecting the format, so that Excel will display the numbers as if they had been divided by 1,000. Make the appropriate note on the heading of each financial statement.
b. On another worksheet, create a statement of cash flows for 2009. All formulas should be linked directly to the source on previous worksheets.
c. Using Excel's outlining feature, create an outline on the balance sheet that, when collapsed, shows only the subtotals for each section.

Problem A2
Using the data from the previous problem:
a. Create a common-size income statement and balance sheet for 2008 and 2009. These statements should be created on a separate worksheet with all formulas linked directly to the income statement and balance sheet.
b. Using the common-size income statement for 2009, create a pro-forma income statement for 2010 assuming that each item is expected to remain in the same proportion as in 2009. The forecasted sales for 2009 are \$7,350,000

https://brainmass.com/economics/balance-of-payments/financial-statements-296283

#### Solution Summary

The solution explains how to prepare the financial statements and also common size statements

\$2.19

## The Colo Company: Multiple-Step Income Statement, Statement of Owner's Equity and Classified Balance Sheet

The Colo Company

Assume it is Monday, May 1, the first business day of the month, and you have just been hired as the accountant for Colo Company, which operates with monthly accounting periods. All of the company's accounting work is completed through the end of April and its ledgers show April 30 balances.
During your first month on the job, the company experiences the following transactions and events (terms for all its credit sales are 2_10, n_30 unless stated differently):

May 1 Issued Check No. 3410 to S&P Management Co. in payment of the May rent, \$3,710. (Use two lines to record the transaction. Charge 80% of the rent to Rent Expense?Selling Space and the balance to Rent Expense?Office Space.)

2 Sold merchandise on credit to Hensel Company, Invoice No. 8785, for \$6,100 (cost is \$4,100). 2 Issued a \$175 credit memorandum to Knox, Inc., for defective (worthless) merchandise sold on April 28 and returned for credit. The total selling price (gross) was \$4,725.

3 Received a \$798 credit memorandum from Peyton Products for the return of merchandise purchased on April 29.

4 Purchased the following on credit from Gear Supply Co.: merchandise, \$37,072; store supplies, \$574; and office supplies, \$83. Invoice dated May 4, terms n_10 EOM.

5 Received payment from Knox, Inc., for the balance from the April 28 sale less the May 2 return and the discount.

8 Issued Check No. 3411 to Peyton Products to pay for the \$7,098 of merchandise purchase on April 29 less the May 3 return and a 2% discount.

9 Sold store supplies to the merchant next door at their cost of \$350 cash.

10 Purchased \$4,074 of office equipment on credit from Gear Supply Co., invoice dated May 10, terms n_10 EOM.

11 Received payment from Hensel Company for the May 2 sale less the discount.

11 Purchased \$8,800 of merchandise from Garcia, Inc., invoice dated May 10, terms 2_10, n_30.

12 Received an \$854 credit memorandum from Gear Supply Co. for the return of defective office equipment received on May 10.

15 Issued Check No. 3412, payable to Payroll, in payment of sales salaries, \$5,320, and office salaries, \$3,150. Cashed the check and paid the employees.
15 Cash sales for the first half of the month are \$59,220 (cost is \$38,200). (Cash sales are recorded daily but are recorded only twice here to reduce repetitive entries.)

15 Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the end of the month to the general ledger accounts. (Such items are posted daily but are posted only twice each month because they are few in number.)

16 Sold merchandise on credit to Hensel Company, Invoice No. 8786, for \$3,990 (cost is \$1,890).

17 Purchased \$13,650 of merchandise from Fink Corp., invoice dated May 14, terms 2_10,n_60.

19 Issued Check No. 3413 to Garcia, Inc., in payment of its May 10 invoice less the discount.

22 Sold merchandise to Lee Services, Invoice No. 8787, for \$6,850 (cost is \$4,990), terms 2_10, n_60.

23 Issued Check No. 3414 to Fink Corp. in payment of its May 14 invoice less the discount.

24 Purchased the following on credit from Gear Supply Co.: merchandise, \$8,120; store supplies, \$630; and office supplies, \$280. Invoice dated May 24, terms n_10 EOM.

25 Purchased \$3,080 of merchandise from Peyton Products, invoice dated May 23, terms 2_10, n_30.

26 Sold merchandise on credit to Crane Corp., Invoice No. 8788, for \$14,210 (cost is \$8,230).

26 Issued Check No. 3415 to Perennial Power in payment of the May electric bill, \$1,283.

29 The owner of Colo Company, Jenny Colo, used Check No. 3416 to withdraw \$7,000 cash from the business for personal use.

30 Received payment from Lee Services for the May 22 sale less the discount.

30 Issued Check No. 3417, payable to Payroll, in payment of sales salaries, \$5,320, and office salaries, \$3,150. Cashed the check and paid the employees.

31 Cash sales for the last half of the month are \$66,052 (cost is \$42,500).
31 Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the end of the month to the general ledger accounts. Foot and crossfoot the journals and make the month-end postings.

Required
1. Enter these transactions in a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, or a general journal as illustrated in this chapter. Post when instructed to do so. Assume a perpetual inventory system.
2. Prepare a trial balance in the Trial Balance columns of the work sheet form provided with the working papers. Complete the work sheet using the following information for accounting adjustments:

a. Expired insurance, \$553.
b. Ending store supplies inventory, \$2,632.
c. Ending office supplies inventory, \$504.
d. Depreciation of store equipment, \$567.
e. Depreciation of office equipment, \$329.

Prepare and post adjusting and closing entries.

3. Prepare a May 2005 multiple-step income statement, a May 2005 statement of owner's equity, and a May 31, 2005, classified balance sheet.

4. Prepare a post-closing trial balance. Also prove the accuracy of subsidiary ledgers by preparing schedules of both accounts receivable and accounts payable.

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