You have been given the following data from the ABC Factory for the year ending

Question

You have been given the following data from the ABC Factory for the year ending Dec 31, 2013. You will need to sort through the listed items and identify which are balance sheet entries and which are income statement items. Balance sheet items are provided as of Dec 31, 2013 and Income Statement values are accrued values provided for the year 2013. Be sure to use the correct formats for the financial statements. Assume the business is a corporation.

a. Construct an accrued income statement for the year ending Dec 31, 2013.

b. Construct a balance sheet as of Dec 31, 2013.

c. Construct a net worth statement as of Dec 31, 2013.

d. Explain what the term payables refers to in the context of a balance e sheet. Examples are a good idea to include as part of your explanation.

e. Provide a brief analysis of this firm using their balance sheet. Refer to the inclass discussions, factsheets and notes as a guide as to what you can review with the balance sheet values.

no 27,500 32,000 2,500 1,100 94,000 14,000 45,250 125,000 311,250 4,000 900 25,000 9,350 600 500 42,000 $ | $ $ $ $ | Account Payable | Accounts Receivable Advertising Expense | Bad Debt Expense | Buildings, Accumulated Depreciation Buildings, Net Book Value Cash Common Stock Variable Expenses Building, Market Value Depreciation Expense, Building Government Bonds held as long-term investment Income Tax for current year Insurance Expense | Interest Expense Inventory Dec 31, 2013 valued via GAAP rules, cost value | Inventory Dec 31, 2013 valued via market value Land Original Value | Land Market Value Machinery, accumulated depreciation Machinery, net book value Machinery, market value | Mortgage due in full May 30, 2015 | Office Equipment, Accumulated Depreciation Office Equipment, Net Book Value Office Equipment, Market Value | Office Supplies Expense Other Expenses | Prepaid Expense | Retained Earning | Salaries expense including all paid and accrued $ $ $ $ $ 92,000 25,000 425,000 83,400 3,400 1,400 50,000 8,000 5,250 non n : urn 2,025 $ 7,000 3,000 ? Solve for this 69,025

Explanation / Answer

a Accured Income Statement for year ending Dec31,2013 Accrued Revenue $ 4,21,400 Advertising Expense $                        2,500 Bad debt expense $                        1,100 Variable expense $                  3,11,250 Depreciation expense Building $                            900 Income Tax for current year $                        9,350 Insurance expense $                            600 Interest expense $                            500 Office Supplies expense $                        2,025 Other expense $                        7,000 Salary $                      69,025 $ 4,04,250 $     17,150 b Balance Sheet as of Dec31,2013 Liabilities Amt Assets Amt Non Current Asset Commom Stock $   1,25,000 Building $ 1,08,000 Retained Earnings $     -10,700 Accumulated Depreciation $   -94,000 (Balance Fig) Net Book Value $     14,000 (Market Value $4,000) Land $     25,000 (Market value $425,000) Machinery $     86,800 Accumulated Depreciation $   -83,400 Net Book Value $       3,400 (Market Value $1,400) Office equipment $     13,250 Accumulated Depreciation $     -8,000 Net Book Value $       5,250 (Market Value 0) Non current liability Non current investment Mortgage $      50,000 Government Bonds $     25,000 Current Liability Current Asset Account Payable $      27,500 Account Receivable $     32,000 Tax Payable $         2,500 Cash $     45,250 Salary Payable $            600 Inventory $     42,000 (Market value $92,000) Prepaid expense $       3,000 $   1,94,900 $ 1,94,900 c Net Worth Statement as of Dec 31,2013 Total Assets $   1,94,900 Less Total Liability Current Liability $      30,600 Non current liability $      50,000 $   1,14,300 d Payables means expense incurred but not paid as on balance sheet date Example: Salary payable, tax payable etc e Current Ratio = Current Asset Current Liability = $   1,22,250 $      30,600 = 4 The current ratio is mainly used to give an idea of a company's ability to pay back its liabilities with its assets. The higher the ratio the better. Quick Ratio = Current Asset - Inventory - prepaid expense Current Liability = $      77,250 $      30,600 = 3 The quick ratio measures the dollar amount of liquid assets available for each dollar of current liabilities.The higher the ratio the better.

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