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Summer2024ACTGroupProject

The document outlines a group project for Summer 2024 ACT 201, requiring students to form groups and complete accounting tasks by December 15, 2024. It includes two discussion questions focused on journalizing transactions for a car repair business and explaining accounting principles using a restaurant example. Additionally, it provides financial statements for Baker Corporation, asking students to prepare a cash flow statement and calculate various financial ratios.

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2 views

Summer2024ACTGroupProject

The document outlines a group project for Summer 2024 ACT 201, requiring students to form groups and complete accounting tasks by December 15, 2024. It includes two discussion questions focused on journalizing transactions for a car repair business and explaining accounting principles using a restaurant example. Additionally, it provides financial statements for Baker Corporation, asking students to prepare a cash flow statement and calculate various financial ratios.

Uploaded by

ronanoconor
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Summer 2024 ACT 201 Group Project

Instructions:

1. Form a group with a maximum of 4 students in each group.


2. Use the course materials and the formulae for ratios provided to solve the following. Make sure
to submit using the drop-box provided in Canvas.
3. Deadline is December 15th 2024 11:59 PM

Discussion question 1:

Ms. Anna started her business (“Anna Car Repairing Shop”) on January 1, 2018. During the first month of
its operations, the business engaged in the following transactions:

Date Transactions
Jan 1 Anna invested cash $100,000 as initial capital to start the business.
Jan 2 An amount of $36,000 was paid as advance rent for three months.
Paid $60,000 cash on the purchase of equipment costing $80,000. The remaining amount was
Jan 3
recognized as note payable.
Jan 4 Purchased office supplies costing $17,600 on account.
Jan 13 Provided services to its customers and received $28,500 in cash.
Jan 13 Paid the accounts payable on the office supplies purchased on January 4.
Jan 14 Paid wages to its employees for the month of January, aggregating $19,100.
Provided $54,100 worth of services to its customers. They paid $32,900 and promised to pay
Jan 18
the remaining amount in the next month.
Jan 23 Received $15,300 from customers for the services provided on January 18.
Jan 25 Received $4,000 as an advance payment from customers.
Jan 26 Purchased office supplies costing $5,200 on account.
Jan 28 Paid water bill of $19,000 for January
Jan 31 Paid $5,000 advertising expense.
Jan 31 Received electricity bill of $2,470 for January.
Jan 31 Received telephone bill of $1,494 for January.
Jan 31 Miscellaneous expenses paid during the month totaled $3,470.
Instructions:

a) Journalize the transactions with explanations (Ignore the reference numbers).


b) Post the transactions in the ledger account.
c) Prepare a Trial Balance for Jan 31, 2018.
d) Prepare an Income Statement and a classified Balance for Jan 31, 2018 based on the information
available in the trial balance.

Total – 40 marks

Discussion question 2:
Write short notes on the following accounting principles using a real-life business example – your
favourite restaurant. In each identify the following in terms of how the restaurant makes money through
selling good (or passable) food to its customers. In each case clearly identify what would enable you, the
hypothetical accountant for the parent company, develop statements of financial performance using the
principles and assumptions. Each should not be more than 250 words.

a) Cost Principle
b) Economic Entity Assumption
c) Going Concern
d) Revenue Recognition Principle
e) Matching Concept
f) Accrual Basis of Accounting

Total: 5 x 6 = 30 marks

1. Baker Corporation provided the following Statements for 2014-15 –

Balance Sheet 2015 2014


Assets $ $
Cash 40,000 70,000
Accounts Receivable 320,000 350,000
Inventory 460,000 320,000
Total Current Asset 820,000 740,000
Gross Fixed Assets 560,000 520,000
Accumulated Depreciation 180,000 150,000
Net Fixed Asset 380,000 370,000
Total Asset 1,200,000 1,110,000
Liabilities & Stockholders’ Equity
Current Liabilities
Accounts Payable 390,000 320,000
Notes Payable 110,000 90,000
Accrued Expense 20,000 20,000
Total Current Liabilities 520,000 430,000
Long Term Debt 320,000 350,000
Total Liabilities 840,000 780,000
Stockholders’ Equity
Common Stock at par 100,000 100,000
Share Premium Reserve 150,000 150,000
Retained Earnings 110,000 80,000
Total Liabilities & Stockholders’ Equity 1,200,000 1,110,000

Income Statement 2015


$
Sales 2,200,000
Cogs 1,420,000
Gross Profit 780,000
Operating Expenses 600,000
Operating Income (EBIT) 180,000
Interest 29,000
Earnings before Tax (EBT) 151,000
Tax (30%) 45,000
Earnings after Tax (Net Income) 106,000
Additional Information:

1. Purchased equipments paying $40,000 cash.


2. Annual depreciation expense was $30,000.
3. Paid cash dividend of $76,000.
4. No sale of fixed asset.

Required

a. Prepare a Cash Flow Statement for the year 2015. – 15 marks


b. Calculate the following Ratios for the year 2015 and explain how the respective ratio can
explain financial performance

Current Ratio
Quick Ratio
Accounts Receivable Turnover
Profit Margin
Asset Turnover
ROA
Return on Common Stockholders’ Equity – 15 marks

Total: 15 x 2 = 30 marks

Project total marks - 100

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