ACC 100: ACC 100 LiveText et Docs Fle Manger Reviewrs ommunity Tools scription P

ID: 2601423 • Letter: A

Question

ACC 100: ACC 100 LiveText et Docs Fle Manger Reviewrs ommunity Tools scription Prepare the following IN EXCELI This is due on December 16, 2017. a) a single-step income statement (b) a statement of owner's equity (c) a balance sheet in report form from the following data for Burt Co., taken from the ledger after adjustments on December 31, the end of the fiscal year. (d) explain your findings in detail about profitability and liquidity $97,200 64,300 72,750 Accounts Payable Accounts Receivable Accumulated Depreciation-Office Equipment Accumulated Depreciation-Store162,100 Equipment Administrative Expenses Cash 56,500 53,000 Cost of Merchandise Sold 121,700 Interest Expense 12,000 MacBook Air 2

Explanation / Answer

(a).

Income Statement

For the year ended December 31

Revenue;

Sales

$365500

Rent revenue

$17500

Total revenue

$383000

Less: Expenses

Cost of merchandise sold

$121700

Administrative expenses

$56500

Interest expense

$12000

Selling expenses

$41500

Total expenses

$231700

Net income

$151300

(b).

Statement of Owner’s Equity

For December 31

Maeve Burt, Capital………….….$81750

Less: Maeve Burt, Withdrawals…($52000)

$29750

Add: Retained earnings (Net income)

$151300

Ending owner’s equity

$181050

(C).

Balance Sheet

For December 31

ASSETS;

Accounts receivable

$64300

Cash

$53000

Merchandise inventory

$93250

Prepaid Insurance

$6500

Supplies

$4000

Office Equipment……………$149750

Less: Accumulated Dep……...($72750)

$77000

Store Equipment………..….…$325000

Less: Accumulated Dep……...($162100)

$162900

Total Assets

$460950

Liabilities & Shareholders’ Funds;

Accounts payable

$97200

Salaries payable

$28700

Notes payable (Due in 2 years)

$154000

Maeve Burt, capital……….……....$81750

Less: Maeve Burt, Withdrawals....($52000)

$29750

Retained Earnings (Net income)

$151300

Total Liabilities & Shareholders’ Funds

$460950

(d).

As per information of the income statement it is clear that Burt Co. has earned net income of $151300 which is 39.50% of total revenues. Hence Burt Co. is in good profitable condition.

Percentage of net income is calculate is as follow;

($151300 / $383000) = 39.50%

Now let’s see the liquidity of the Burt Co.;

Current ratio = Current assets / current liabilities

$217050 / $125900 = 1.73 times

So on the basis of current ratio, it is also clear that company have sufficient liquidity to pay its’ current liabilities because Burt Co. has sufficient current assets of $217050 in compare to current liabilities of $125900. Thus overall good liquidity.