For this assignment you will be making adjustments to the financial statements based on new transactions and describing various financial reports.
For this assignment you will be making adjustments to the financial statements based on new transactions and describing various financial reports. Refer to the Excel spreadsheet, “Company Overview Template,” for the instructions and details to complete this assignment.
While APA style is not required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA formatting guidelines, which can be found in the APA Style Guide, located in the Student Success Center.
This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.
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Toys, Inc began operations on December 31, 2019 with the following transactions:
1. Purchased equipment for $15,000
2. Purchased inventory on account for $6,000
3. Issued common stock for $20,000
Toys, Inc’s balance sheet including those transactions as of December 31, 2019, was as follows:
Toys, Inc.
Balance Sheet
As of December 31, 2019
Assets:
Cash $ 5,000
Receivables –
Inventory 6,000
Land –
Property Plant and Equipment 15,000
Total Assets $ 26,000
Liabilities and Equity:
Accounts Payable $ 6,000
Note Payable –
Common Stock 20,000
Retained Earnings –
Total liabilities and stockholders’ equity $ 26,000
During January 2020, the company had the following transactions:
Example: Made payments of $4,000 on outstanding accounts payable
1. Sold $2,000 of inventory to customers for $3,000 in cash.
2. Purchased $2,500 of new inventory for cash
3. Sold $3,500 of inventory to customers on account for $5,500.
4. During the month, received $3,500 from customers as payments on their accounts
5. Borrowed $20,000 from the bank and issued stock for $5,000 to purchase land for $25,000 for a future warehouse
6. Paid employees $2,000 for payroll
Required:
1. Record the January 2020 transactions by adding and subtracting amounts in the rows of the following table in a way that the row totals represent the end of the month balances in the financial statements. (fill in the shaded area as needed)
2. Explain the main characteristics of the balance sheet and the income statement and the relationship between those two statements.
Balance Transaction Number
at 12/31/19 Example 1 2 3 4 5 6 Total
Cash $ 5,000 (4,000) $ 1,000
Receivables – –
Inventory 6,000 6,000
Land – –
Property Plant and Equipment 15,000 15,000
Total Assets $ 26,000 $ 22,000
Accounts Payable $ 6,000 (4,000) $ 2,000
Note Payable – –
Common Stock 20,000 20,000
Retained Earnings – – –
Total Liabilities and Equity $ 26,000 $ 22,000
Check (must equal zero) –
Income Statement
Sales $ –
Cost of Goods Sold –
Payroll expenses –
Net Income $ –
Requirement 2
Characteristics of a Balance Sheet
Characteristics of an Income Statement
Relationship between the Balance Sheet and the Income Statement
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