ACCOUNTING 112
PRACTICE SET
DUE DATE: Friday, November 26, 2021
Project must be typed. Project must be your own work. I suggest using excel. Include a cover page.
Required #1
Using Be Prepared, Inc.’s adjusted trial balance and prior period’s balance sheet, prepare the following Financial Reports:
Multi-Step Income Statement for the month of January 2020 (see page 180/181 in your textbook for guidance). Check figure: $1,312 net income.
Statement of Retained Earnings for the month of January 2020 (see page 479/480 in your textbook for guidance). Note: There are no prior period adjustments and all dividends declared are cash dividends in the amount of $31,060.
Comparative Balance Sheet for the months of December 2019 and January 2020 (See page 617/618 in your textbook for guidance). Check figure: Total liabilities $1,013,378 (2020).
Common–Size Comparative Balance Sheet for the months of December 2019 and January 2020 (See page 619 in your textbook for guidance).
Required #2
Use the Income Statement and Comparative Balance Sheet you prepared in Required #1 and the following additional information to prepare the Statement of Cash Flows (Indirect Method) for the month of January 2020 (see page 581 for an example).
Check figure: net cash provided by operating activities $55,050.
Issued 10,000 new shares of common stock in exchange for a piece of land. The stock was selling on the market at an average price of $10 per share on the date of sale and the par value of the stock was 50 cents.
Purchased land with a cost $250,000. A down payment was made in the amount of $50,000 cash and a 10% 5-year note payable was signed for the difference.
Purchased additional store equipment for $50,000 paying cash.
The $10,000 notes receivable was related to the sale of merchandise inventory to a credit customer this period. Hint: The increase in notes receivable should be reported as an addition to the operating activities section of the statement of cash flows.
Issued bonds with a face amount of $800,000 at 97. Hint: The amortization of the bond discount in the amount of $100 should be reported as an addition to the operating activities section.
Used the cash proceeds from the bond issue to pay off the mortgage payable of $200,000.
The company repurchased 20,000 shares of its common stock on the open market for $9 per share.
The company reissued 9,125 of the treasury shares at a price of $20 per share.
Issued 1,500 shares of preferred stock at $105 per share.
Paid cash dividends of $31,060 to preferred and common stockholders.
Required #3
Prepare the following Ratios for January 2020 and include formula and calculation:
Current Ratio
Acid-Test Ratio
Working Capital
Days’ sales in inventory
Day’s sales uncollected
Debt Ratio
Equity Ratio
Debt-to-equity
Profit Margin Ratio
Gross Margin Ratio