Chemalite Inc - study case

EXECUTIVE SUMMARY
In the case of Chemalite, Inc. we analyzed the financial data provided by one of the largest stockholders of the company, Bennett Alexander, and the company’s bookkeeper. According to given expenditures, transactions, cash outflows and other related financial information; we prepared transaction journals, T-accounts, income statements, statements of financial position and statements of cash flows for the six months ended June 30, 2003 and for the year ended December 31, 2003. We then concluded our report with an analysis about the financial performance of Chemalite, Inc. for its first year.

THE DATA
The case of Chemalite, Inc. gives detailed information about how the company was formed and the financial data of the year 2003. The expenditures, transactions and cash outflows are given in two halfs of the year 2003.

SOFTWARE
Our analysis was performed entirely in Excel 2007.

ANALYSIS
The first question asks to prepare a summary of the cash transactions for the six months ended June 30, 2003. The summary and the T-accounts are shown in Table 1 and Table 2.

Table 1. Cash transactions for the six months ended June 30, 2003
Date
Entry No.
Accounts and Explanation
Debit
Credit
1/2/2003
1
Intengible Assets (patent) $ 125,000

Cash $ 375,000

Shareholder 's Equity $ 500,000

Establishmnet of Chemalite, Inc.

1/15/2003
2
Incorporation Expenses $ 7,500

Cash $ 7,500

Expenses like legal fees, charter costs...etc

6/15/2003
3
PP&E $ 62,500

Cash $ 62,500

Building the machinery

6/24/2003
4
Inventory $ 75,000

Cash $ 75,000

Purchasing Inventory

Table 2. T-accounts for the six months ended June 30, 2003
Assets

Liabilities and Shareholders ' Equity

Cash

Shareholder 's Equity

1 $ 375,000 $ 7,500
2

$ 500,000
1

$