The entire assignment must be submitted in the Assignments section on Blackboard as ONE document.
accounting
Description
Assignment #1 – 7.5%
of your Final Grade
Submission
Requirements
·
The entire assignment must be
submitted in the Assignments section on Blackboard as ONE document.
o
Emailed assignments will not be
accepted.
·
Late assignments will not be
accepted.
·
PDF’s will not be accepted.
·
Solutions must be in MS Word. Handwritten work will not be accepted.
·
All financial statements must
be in chart form (in Word). Images
(jpeg, gif etc. will not be accepted.
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Scenario
You have just been hired as the Marketing Manager for
a midsized bicycle and biking apparel company.
The owners Strider & Candace Wheeler would like to
develop a plan to expand into the growing electric bike market, particularly
within urban markets like Toronto.
You have been hired by the children to:
1.
Review the current finances of
the company.
2.
Analyze how the company has
performed over the past few years.
3.
Prepare a cash budget for the
new organic line of business.
4.
Determine if the new line makes
any financial sense.
To address this scenario, and to prepare you for your
future as a senior member of the team, you will perform the following actions. For this assignment 1 you are to
perform Actions 1-3.
|
Action(s) |
Relevant Resources / Chapters |
Assignment |
|
|
|
|
|
1.
Review the Company’s accounts. |
Week 2 PPT
& Handouts |
Assignment #1 |
|
2.
Create 3 key financial statements. |
PPT &
Handouts |
|
|
3.
Analyze the Company’s performance. |
Chapter 2
& 3 |
|
|
4.
Evaluate receivable &
payment Terms |
Chapter 20 |
Assignment #2 |
|
5.
Review cash & operating
cycles. |
Chapter 18 |
|
|
6.
Create a basic cash budget
for the expansion. |
Chapter 18 |
|
|
7.
Identify any borrowing /
financing requirements. |
Chapter 18 |
|
|
8.
Determine the viability of
the expansion through a # of methods. |
Chapters 5, 6 & 9 |
Assignment #3 |
|
9.
Report your findings to the
CEO. |
|
Question #1
– (30 marks)
The last few years the owners (Strider & Candace
Wheeler) have not been the best at keeping accurate financial statements, their
accountant is as old as they are.
From their disastrous financial records you have
gathered the information in the Chart of Accounts below.
Create the Income Statement and Balance Sheet for
both 2018 & 2019.
·
Use the templates provided for
how they should look.
o
Ensure you include all the
accounts (do not just put totals). Example, there should be no Net Fixed Assets
etc.
·
Do not create a Statement of
Changes of Equity. It is not needed for this assignment.
·
Company’s tax rate is 35%.
·
Also note that the Retained
Earnings are beginning balances, as of January 1st each year. You
will have to calculate their ending balances.
|
Chart of Accounts |
|||||
|
BikesAreBetter Inc. |
|||||
|
|
|
|
|
|
|
|
|
31-Dec-18 |
|
31-Dec-19 |
||
|
|
Balance |
|
Balance |
||
|
Account |
Debit |
Credit |
|
Debit |
Credit |
|
|
|
|
|
|
|
|
Cash |
$ 1,250,000 |
|
|
$ 1,757,438 |
|
|
Accounts Receivable |
$ 950,000 |
|
|
$ 1,021,250 |
|
|
Office Supplies |
$ 75,000 |
|
|
$ 78,750 |
|
|
Manufacturing Equipment |
$ 4,500,000 |
|
|
$ 4,500,000 |
|
|
Inventory |
$ 1,750,000 |
|
|
$ 1,925,000 |
|
|
Acc. Depreciation Equipment |
|
$ 3,150,000 |
|
|
$ 3,600,000 |
|
Accounts Payable |
|
$ 925,000 |
|
|
$ 1,040,625 |
|
Interest Payable |
|
$ 93,750 |
|
|
$ 75,000 |
|
Income Taxes Payable |
|
$ 387,188 |
|
|
$ 366,713 |
|
Long-term Notes Payable |
|
$ 1,250,000 |
|
|
$ 1,000,000 |
|
Common Stock |
|
$ 1,500,000 |
|
|
$ 1,500,000 |
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