This assignment provides you the opportunity to prepare basic financial statements and apply the knowledge learned in Unit 1 to locate financial information in a set of financial statements. Complete P1-1 (page 33) and CP1-2 (page 37) from Chapter 1 of your Financial Accounting textbook.
The ability to determine the financial impact of transactions is an important skill that all business professionals should possess. T-accounts provide a valuable tool for analyzing the effects of transactions. This assignment provides you the opportunity to analyze various transactions using T-accounts and utilize the information to prepare a classified balance sheet. In addition, you will utilize the new concepts learned in this chapter to further analyze the financial statements of Urban Outfitters.
Complete P2-3 (pages 88–89) and CP2-2 (page 93) from Chapter 2 of your Financial Accounting textbook.
Place yourself in the role of one of the following stakeholders in a company: an investor, a creditor, or a manager. Summarize the information you would look for on each of the four basic financial statements, and explain why that information is pertinent to you. Include answers to two of the four questions below in your summary:
Post your answers in this discussion, then proceed to the response guidelines.
Two Templates for how the first task should be setup.
P1-1 Preparing an Income Statement, Statement of Stockholders Equity, and Balance Sheet LO1-1Assume that you are the president of Highlight Construction Company. At the end of the first year (December 31, 2014) of operations, the following financial data for the company are available:Cash$25,600Receivables from customers (all considered collectible)10,800Inventory of merchandise (based on physical count and priced at cost)81,000Equipment owned, at cost less used portion42,000Accounts payable owed to suppliers46,140Salary payable for 2014 (on December 31, 2014, this was owed to an employee2,520who was away because of an emergency; will return around January 10, 2015,at which time the payment will be made)Total sales revenue128,400Expenses, including the cost of the merchandise sold (excluding income taxes)80,200Income taxes expense at 30% × pretax income; all paid during 2014?Common stock (December 31, 2014)87,000Dividends declared and paid during 201410,000(Note: The beginning balances in Common stock and Retained earnings are zero because it is the first year of operations.)Required:1. Prepare a summarized income statement for the year 2014.HIGHLIGHT CONSTRUCTION COMPANYIncome StatementFor the Year Ended December 31, 2014Net income$33,7402. Prepare a statement of stockholders' equity for the year 2014HIGHLIGHT CONSTRUCTION COMPANYStatement of Stockholders’ EquityFor the Year Ended December 31, 2014Common StockRetained EarningsBalance December 31, 2013Balance December 31, 20143. Prepare a balance sheet at December 31, 2014.HIGHLIGHT CONSTRUCTION COMPANYBalance SheetAt December 31, 2014AssetsTotal assets$ 159,400LiabilitiesTotal liabilities$ -Stockholders' EquityTotal stockholders' equity$ -Total liabilities and stockholders' equity$ –
CP1-2 Finding Financial Information LO 1-1Refer to the financial statements of Urban Outfitters in Appendix C at the end of this book.Required:1. What is the amount of net income for the most recent year?Net incomeThis information can be found on the2. What amount of revenue was earned in the most recent year?Net salesThis information can be found on the3. How much inventory (in dollars) does the company have as of January 31, 2012?InventoryThis information can be found on the4. By what amount did cash and cash equivalents * change during the most recent year?Cash and Cash EquivalentsbyThis information can be found on the5. Who is the auditor for the company?* Cash equivalents are short-term investments readily convertible to cash whose value is unlikely to change.
These excel templates and scoring guide are for the second task:
CP2-2Finding Financial InformationLO2-1, 2-2, 2-5, 2-6Refer to the financial statements of Urban Outfitters in Appendix C at the end of this book.Required:1. Use the company's balance sheet to determine the amounts in the accounting equation (A = L + SE) as of January 31, 2012.Assets=Liabilities+Shareholders’ Equity=+2. If the company were liquidated at the end of the current year (January 31, 2012), are the shareholdersguaranteed to receive $1,066,268,000?Why or why not?3. What are the company's noncurrent liabilities?4. What is the company's current ratio?Current ===Ratio5. Did the company have a cash inflow or outflow from investing activities?Of how much?
P2-3 Recording Transactions in T-Accounts, Preparing the Balance Sheet from a Trial Balance, and Evaluating the Current Ratio LO2-2, 2-4, 2-5Cougar Plastics Company has been operating for three years. At December 31, 2014, the accounting records reflected the following:Cash$22,000Accounts payable$15,000Investments (short-term)3,000Accrued liabilities payable4,000Accounts receivable3,000Notes payable (short-term)7,000Inventory20,000Long-term notes payable47,000Notes receivable (long-term)1,000Common stock10,000Equipment50,000Additional paid-in capital80,000Factory building90,000Retained earnings31,000Intangibles5,000During the year 2015, the company had the following summarized activities:a.Purchased short-term investments for $10,000 cash.b.Lent $5,000 to a supplier who signed a two-year note.c.Purchased equipment that cost $18,000; paid $5,000 cash and signed a one-year note for the balance.d.Hired a new president at the end of the year. The contract was for $85,000 per year plus options to purchase company stock at a set price based on company performance.e.Issued an additional 2,000 shares of $0.50 par value common stock for $11,000 cash.f.Borrowed $9,000 cash from a local bank, payable in three months.g.Purchased a patent (an intangible asset) for $3,000 cash.h.Built an addition to the factory for $24,000; paid $8,000 in cash and signed a three-year note for the balance.i.Returned defective equipment to the manufacturer, receiving a cash refund of $1,000.Required:1. & 2.Record each necessary entry for the events in 2015 in T-accounts (including referencing) and determine the ending balances. The balances at the end of2014 have been entered as beginning balances for 2015.(Transaction (a) has been completed in the T-accounts as an example.)CashInvestments (short-term)Beg. Bal.22,000Beg. Bal.3,00010,000(a)(a)10,0003,000(g)End. Bal.End. Bal.Accounts ReceivableInventoryBeg. Bal.3,000Beg. Bal.20,000End. Bal.End. Bal.Notes Receivable (long-term)EquipmentBeg. Bal.1,000Beg. Bal.50,000End. Bal.End. Bal.Factory BuildingIntangiblesBeg. Bal.90,000Beg. Bal.5,000(g)3,000End. Bal.End. Bal.Accounts PayableAccrued Liabilities PayableBeg. Bal.15,000Beg. Bal.4,000End. Bal.End. Bal.Notes Payable (short-term)Long-Term Notes PayableBeg. Bal.7,000Beg. Bal.47,000End. Bal.End. Bal.Common StockAdditional Paid-in CapitalBeg. Bal.10,000Beg. Bal.80,000End. Bal.End. Bal.Retained EarningsBeg. Bal.31,000End. Bal.Required:4Prepare a trial balance at December 31, 2015.COUGAR PLASTICS COMPANYTrial BalanceAt December 31, 2015Account TitlesDebitCreditCashInvestments (short-term)Accounts receivableInventoryNotes receivable (long-term)EquipmentFactory buildingIntangiblesAccounts payableAccrued liabilities payableNotes payable (short-term)Notes payable (long-term)Common stockAdditional paid-in capitalRetained earningsTotals$243,000$0Required:5Prepare a classified balance sheet at December 31, 2015.COUGAR PLASTICS COMPANYBalance SheetAt December 31, 2015AssetsLiabilitiesCurrent assets:Current liabilities:Total current liabilities-Total current assets-Non-current assets:Total liabilities0Stockholders' EquityTotal non-current assets-Total stockholders' equity-Total assets$ -Total liabilities and stockholders' equity$ -Required:6Compute the current ratio for 2015. (Round your answer to 2 decimal places.)Current ratioThese excel templates and scoring guide are for the second task:
CP2-2Finding Financial InformationLO2-1, 2-2, 2-5, 2-6Refer to the financial statements of Urban Outfitters in Appendix C at the end of this book.Required:1. Use the company's balance sheet to determine the amounts in the accounting equation (A = L + SE) as of January 31, 2012.Assets=Liabilities+Shareholders’ Equity=+2. If the company were liquidated at the end of the current year (January 31, 2012), are the shareholdersguaranteed to receive $1,066,268,000?Why or why not?3. What are the company's noncurrent liabilities?4. What is the company's current ratio?Current ===Ratio5. Did the company have a cash inflow or outflow from investing activities?Of how much?
P2-3 Recording Transactions in T-Accounts, Preparing the Balance Sheet from a Trial Balance, and Evaluating the Current Ratio LO2-2, 2-4, 2-5Cougar Plastics Company has been operating for three years. At December 31, 2014, the accounting records reflected the following:Cash$22,000Accounts payable$15,000Investments (short-term)3,000Accrued liabilities payable4,000Accounts receivable3,000Notes payable (short-term)7,000Inventory20,000Long-term notes payable47,000Notes receivable (long-term)1,000Common stock10,000Equipment50,000Additional paid-in capital80,000Factory building90,000Retained earnings31,000Intangibles5,000During the year 2015, the company had the following summarized activities:a.Purchased short-term investments for $10,000 cash.b.Lent $5,000 to a supplier who signed a two-year note.c.Purchased equipment that cost $18,000; paid $5,000 cash and signed a one-year note for the balance.d.Hired a new president at the end of the year. The contract was for $85,000 per year plus options to purchase company stock at a set price based on company performance.e.Issued an additional 2,000 shares of $0.50 par value common stock for $11,000 cash.f.Borrowed $9,000 cash from a local bank, payable in three months.g.Purchased a patent (an intangible asset) for $3,000 cash.h.Built an addition to the factory for $24,000; paid $8,000 in cash and signed a three-year note for the balance.i.Returned defective equipment to the manufacturer, receiving a cash refund of $1,000.Required:1. & 2.Record each necessary entry for the events in 2015 in T-accounts (including referencing) and determine the ending balances. The balances at the end of2014 have been entered as beginning balances for 2015.(Transaction (a) has been completed in the T-accounts as an example.)CashInvestments (short-term)Beg. Bal.22,000Beg. Bal.3,00010,000(a)(a)10,0003,000(g)End. Bal.End. Bal.Accounts ReceivableInventoryBeg. Bal.3,000Beg. Bal.20,000End. Bal.End. Bal.Notes Receivable (long-term)EquipmentBeg. Bal.1,000Beg. Bal.50,000End. Bal.End. Bal.Factory BuildingIntangiblesBeg. Bal.90,000Beg. Bal.5,000(g)3,000End. Bal.End. Bal.Accounts PayableAccrued Liabilities PayableBeg. Bal.15,000Beg. Bal.4,000End. Bal.End. Bal.Notes Payable (short-term)Long-Term Notes PayableBeg. Bal.7,000Beg. Bal.47,000End. Bal.End. Bal.Common StockAdditional Paid-in CapitalBeg. Bal.10,000Beg. Bal.80,000End. Bal.End. Bal.Retained EarningsBeg. Bal.31,000End. Bal.Required:4Prepare a trial balance at December 31, 2015.COUGAR PLASTICS COMPANYTrial BalanceAt December 31, 2015Account TitlesDebitCreditCashInvestments (short-term)Accounts receivableInventoryNotes receivable (long-term)EquipmentFactory buildingIntangiblesAccounts payableAccrued liabilities payableNotes payable (short-term)Notes payable (long-term)Common stockAdditional paid-in capitalRetained earningsTotals$243,000$0Required:5Prepare a classified balance sheet at December 31, 2015.COUGAR PLASTICS COMPANYBalance SheetAt December 31, 2015AssetsLiabilitiesCurrent assets:Current liabilities:Total current liabilities-Total current assets-Non-current assets:Total liabilities0Stockholders' EquityTotal non-current assets-Total stockholders' equity-Total assets$ -Total liabilities and stockholders' equity$ -Required:6Compute the current ratio for 2015. (Round your answer to 2 decimal places.)Current ratio
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