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Financial Accounting Project Part I and II




Question;Financial Accounting Project I.The Jasmine Department store is located in Chicago, Illinois. At the close of the year ended December31,2008, the following accounts appeared in two of its trial balances.Trial BalancesAccounts PayableAccounts ReceivableAccumulated Depreciation-Delivery EquipmentAccumulated Depreciation-Store EquipmentCashDelivery ExpenseDelivery EquipmentDepreciation Expense-Delivery EquipmentDepreciation Expense-Store EquipmentFreight-inCommon StockRetained EarningsDividendsInsurance ExpenseInterest ExpenseInterest RevenueMerchandise InventoryNotes PayablePrepaid InsuranceProperty Tax ExpensePurchasesPurchase DiscountsPurchase Returns and AllowancesRent ExpenseSalaries ExpenseSalesSales Commissions ExpenseSales Commissions PayableSales Returns and AllowancesStore EquipmentProperty Taxes PayableUtilities ExpenseUnadjusted$23,21510,88015,68032,3006,0007,00057,0005,06070,00016,30511,0008,0003,70034,36045,00013,500630,5007,0003,00018,400120,000860,0008,00012,500125,0009,000Adjusted$23,21510,88019,68041,8006,0007,00057,0004,0009,5005,06070,00016,30511,0009,0008,0003,70034,36045,0004,5003,500630,5007,0003,00018,400120,000860,00014,0006,00012,500125,0003,5009,000Analysis reveals the following additional data: beginning balance of accounts receivable is $12,750.The amount of total assets at the beginning of the year is $145,921.Salaries expense is 65% selling and 35% administrative.Insurance expense is 50% selling and 50% administrative.A physical inventory was conduced for year ended December 31, 2008 and the inventory was valued at$38,100.Rent expense, utilities expense, and property tax expense are administrative expenses.$15,000 of the notes payable is due for payment next year.Instructions1) Journalize the adjusting entries that were made by the company.2) Prepare a multiple-step income statement and a retained earnings statement for the year and a classifiedbalance sheet as of December 31, 2008.3) Journalize the closing entries.4) Prepare a post-closing trial balance.5) Prepare the following ratios and show all support for your computations:(No partial credit if work or computations are not shown)a) Current Ratiob) Quick Ratioc) Working Capitald) Accounts Receivable Turnovere) Average Collection Periodf) Inventory Turnoverg) Days in Inventoryh)Debt to Total Assets Ratioi) Gross Profit Ratioj) Profit Margin Ratiok) Return on Assets Ratiol) Asset Turnover Ratio6) Based on the ratios computed in 5) above, answer the following questions and use the financial statementratios to support your answers where appropriate:Do you feel that the company is able to meet its current and long term obligations as they become due?Comment on the profitability of the company with respect to the various profitability ratios that youcomputed.Would you lend money to this company for the long term?Comment on the ability of the company to collect its receivables and mange inventory.IndustryAverage2005200620071.100.96$ 14,500.001.261.11$ 13,000.001.401.21$ 15,980.0050.08%5.1249.89%5.9947.99%6.3146.84%6.8918.205.924.6719.526.455.0320.037.015.1726.527.765.495.4562.3120.055.1267.0218.705.0869.8718.224.9572.1519.20LiquidityCurrentQuickWorking CapitalLeverageDebt to Total Assets (%)Times Interest EarnedActivityInventory Turnover (sales)Fixed Asset TurnoverTotal Asset TurnoverAverage Collection Period(days)Accounts Receivable TurnoverDays in Inventory1.371.10$15,000.00ProfitabilityGross Profit Margin (%)Net Profit (%)Return on Total Assets (%)Return on Equity (%)Payout Ratio25.61%1.99%7.30%16.79%54.00%.22%2.56%8.20%17.56%63.00&.87%3.58%9.43%18.03%73.00%27.81%4.60%9.89%19.02%48.00%Financial Accounting Project II.The bank section of the bank reconciliation for the Bondar Company at November 30, 2007 was as follows:.BONDAR COMPANYBank ReconciliationNovember 30, 2007Cash balance per bankAdd: Deposits in transit$14,367.902,530.2016,898.10Less:Outstanding checksCheck Number Check Amount3451$2,260.403470720.103471844.5034721,426.8034741,050.006,301.80Adjusted cash balance per bank$10,596.30The adjusted cash balance per bank agreed with the cash balance per books at November 30.The December bank statement showed the following checks and deposits.12-112-212-712-412-812-1012-1512-2712-3012-2912-31Date12-1CheckNumberAmount34513471347234753476347734793480348234833485$2,260.40844.501,426.801,640.701,300.002,130.003,080.00600.00475.501,140.00540.80TotalDate$15,438.70Deposit Amount$2,530.2012-412-812-1612-2112-2612-2912.301,211.602,365.102,672.702,945.002,567.302,836.001,025.00Total$18,152.90The cash records per books for December showed the following:Cash Payments JournalDate12-112-212-212-412-812-1012-17Number3475347634773478347934803481Amount$1,640.701,300.002,130.00538.203,080.00600.00807.40Date12-2012-2212-2312-2412-30TotalCash Receipts JournalNumber34823483348434853486Amount$ 475.501,140.00832.00450.801,389.50$14,384.10DateAmount12-3$1,211.6012-72,365.1012-152,672.7012-20'2,954.0012-252,567.3012-282,836.0012-301,025.0012-311,190.40Total $16,822.10The bank statement contained two memoranda:1.A credit of $2,145 for the collection of a $2,000 note for Bondar Company plus interest of $160 and less a collection fee of $15.00. BondarCompany has not accrued any interest on the note.2.A debit of $527.10 for an NSF check written by A. Jordan, a customer. At December 31, the check had not been redeposited in the bank.At December 31 the cash balance per the books was $13,034.30 and the cash balance per the bank statement was $18,700.The bank did not make any errors but two errors were made by Bondar Company.Instructions(a) Prepare the bank reconciliation at December 31, 2007(b) Prepare the adjusting entries based on the reconciliation. (Note: The correction of any errors pertaining to recording checks should be made toAccounts Payable. The correction of any errors relating to recording cash receipts should be made to Accounts Receivable.)


Paper#38904 | Written in 18-Jul-2015

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