Acc 291 Week 3 Financial Ratios Paper

Angela Mohr
Corporate Accounting
Week 3
Individual work -
Ratios compare financial data among companies or within a single company. They reflect accounting transactions and conditions of a company. To further explore ratios and their effect on transactions and finances, please complete the following.
- Exercise 3-6 “Normal Account Balances” on pg. 133
- Exercise 3-14 “Journal Entries” on pg 135
- Exercise 3-2 “Transaction Analysis and Financial Statements” on pg 137.
Exercise 3-6, pg 133
1. Cash - Debit
2. Prepaid Insurance - Credit
3. Retained Earnings- Credit
4. Bonds Payable - Credit
5. Investments - Debit
6. Capital Stock - Credit
7. Advertising Fees Earned - Debit
8. Wages & Salaries Expense - Debit
9. Wages
& Salaries Payable - Credit
10. Office Supplies - Debit
11. Dividends - Debit Exercise 3-14, pg 13
DateJournal Entry Debit Credit
1. Accounts Receivable$1.350
Services Revenue$1,350
2. Supplies$1,365
Accounts Payable$1,365
3.
Cash$750
Services Revenue$750
4. Equipment$4,240
Accounts Payable $4,240
5. Asset (whatever the note was for)$2,500
Notes Payable $2,500
6. Cash$890
Accounts Receivable $890
7. Land$50,000
Capital Stock $50,000
8. Salary & Wages $4,000
Cash$4,000
9. Accounts Payable$500
Cash $500
Problem 3-2, pg 137 Assets = Liabilities + Stockholders’ Equity
Transaction Accounts Accounts Notes capital Retained # Cash Receivable Equipment Building Land Payable Payable Stock Earnings
5-1 $18,000 $3,000 $3,000 + $18,000
5-5 - $15 - $15
Bal. $17,985$3,000$3,000 $18,000 - $15
5-9 - $4,400$4,400
Bal $13,585$7,400$3,000 $18,000 -$15
5-10 $ 100$ 100
Bal$13,585$7,500$3,100 $18,000 -$15
5-15 - $ 125- $125
Bal$13,460$7,500$3,100 $18,000 - $140
5-17 $ 1,800$1,800
Bal$15,260$7,500$3,100 $18,000$1,660
5-24 $1,200$1,200
Bal$15,660 $1,200$7,500$3,100 $18,000$2,860
5-29 $ 600 - $600
Bal $15,860 $ 600$7,500$3,100 $18,000
$2,860
5-30 $ 3,000$3,000 - $ 160- $ 160
Bal $18,700 $600$7,500$3,100 $18,000 $5,700
5-31 - $3,000 - $3,000
Bal $15,700 $600$7,500 $ 100 $18,000 $5,700 Total Assets: $ 23,800 Total Liabilites & Stockholders’ Equity $ 23,800
Just Rolling Along, Inc.
Income Statement
Month Ending May 31, 2012
Revenues:
Rental Revenue$4,800
Lessons Revenue$1,200
Total Revenue $6,000
Expenses:
Advertising$ 125
Equipment$4,200
Wages$ 160
County Fees $ 15
Misc. Supplies$ 100
Total Expenses $4,600
Net Income $1,400
Just Roll Along, Inc
Balance Sheet
May 31, 2012
Assets Liabilities & Stockholders’ Equity
Cash $ 15,700Accounts Payable $ 100
Accounts Receivable $ 600Capital Stock $18,000
Equipment $ 7,500Retained Earnings $ 5,700
Total Assets $23,800Total liabilities & $23,800
Stockholders’ Equity
The friends could have decided to go with incorporating their business instead of running it as a partnership to protect themselves and each other. If they had a partnership either partner could make decisions for the company as a whole without consulting the other. Also, as a partnership they would both be equally liable, should they be sued for some reason. Meaning no matter which partner created the liability both are equally responsible for this and can lose any of their personal assets. By incorporating their business they can protect their personal assets should the company be sued. Aside from the legal benefits of incorporating their business, they are in college, and a lot of times friends that we have in college don’t always stick around, so by incorporating their company they could easily transfer ownership to the other, should one of them want to walk away from the company in the future.