ACC 1022 Spring 2023 Comprehensive Project Name___________________________________ BVD Corp Trial Balance at December 31, 20XX is presented below. ?All 20XX transactions have been recorded e

ACC 1022 Spring 2023 Comprehensive Project Name___________________________________

BVD Corp Trial Balance at December 31, 20XX is presented below.

All 20XX transactions have been recorded except for the items described on the next page.

Debit Credit Cash $ 126,934 Accounts Receivable 54,820 Inventory 95,125 Debt Investments 0 Land 102,200 Buildings 255,850 Equipment 102,120 Allowance for Doubtful Accounts $ 13,250 Accumulated Depreciation-Buildings 63,306 Accumulated Depreciation-Equipment 26,630 Accounts Payable 35,278 Interest Payable 0 Unearned Rent Revenue 32,700 Dividends Payable 0 Income Tax Payable 0 Bonds Payable 0 Discount on Bonds Payable 0 Common Stock ($5 par) 165,000 Paid in Capital in Excess of Par-Common Stock 44,580 Preferred Stock ($50 par) 0 Paid in Capital in Excess of Par-Preferred Stock 0 Retained Earnings 133,477 Treasury Stock 0 Cash Dividends 0 Sales Revenue 844,200 Rent Revenue 0 Loss on sale of land 0 Gain on sale of debt investments 0 Bad Debt Expense 0 Interest Expense 0 Cost of Goods Sold 303,912 Depreciation Expense . 0 Other Operating Expenses 162,460 Salaries and Wages Expense 155,000 Income Tax Expense 0 Total $ 1,358,421 $ 1,358,421

CONTINUED ON NEXT PAGE

Page 1

Unrecorded transactions: Round all calculations if necessary to -0- decimals (to the nearest dollar, do not show cents). 1. On January 1, 20XX, BVD Corp. issued 3,500 shares of $50 par, 7% preferred stock for $275,000.

2. On January 1, 20XX, BVD Corp. also issued 7,000 shares of common stock for $68,550.

3. On January 1, 20XX, BVD Corp. issued $900,000, 6%, 10 year bonds when the market rate was 8%. (Hint: Cash received will be the present value of the bond) Interest is to be paid annually on each January 1, beginning one year from date of issue.

4. BVD Corp. reacquired 4,000 shares of its common stock on January 12, 20XX for $11.00 per share.

5. On December 31, 20XX, BVD Corp. declared the annual preferred dividend plus a $1.00 per share dividend on the outstanding common stock, all payable in cash on January 31 of next year.

6. Bought Debt Investments worth $75,000 for cash.

7. On December 31, 20XX, BVD Corp. estimates that the total amount of accounts receivable that is uncollectible at year end is $15,480.

8. The building is being depreciated using the straight line method over 15 years. The salvage value is $85,000.

9. The equipment is being depreciated using the straight line method over 5 years. The salvage value is $15,000.

10. Sold the Land for $100,000 cash.

11. The unearned rent for the current month was collected on December 1, 20XX. The original amount received was 3 months' rent in advance (December 1 of this year through February 28 28 of next year).

12. The first cash interest payment on the 6% bonds is due January 1 of next year. The annual interest on the bonds for 20XX has not yet been recorded. Use the effective interest method.

13. The BVD Corporation sold half of the Debt Investments for $40,000 cash

14. The BVD Corporation must make an adjusting entry to accrue income tax expense on Income Before Income Tax at a rate of 32%. The taxes will not be paid until March of next year.

Instructions: (a) Prepare journal entries for the transactions listed above. (b) Prepare an updated December 31, 20XX trial balance. (c) Prepare a multiple-step income statement for the year ending December 31, 20XX. (d) Prepare a retained earnings statement for the year ending December 31, 20XX. (e) Prepare a classified balance sheet as of December 31, 20XX. (f) Prepare a Statement of Cash Flows as of December 31, 20XX. (g) and (h) Calculate and analyze the following ratios, clearly presenting your work and answers: 1. Working Capital 4. EPS 7. Times Interest Earned 2. Current Ratio 5. Payout Ratio 8. Free Cash Flow 3. Return on Stockholders' Equity 6. Debt to Assets Ratio

Page 2

COMPREHENSIVE PROJECT, cont.

BVD Corporation

(a) General Journal

Date Debit Credit

CONTINUED

Account Titles

Page 3

BVD Corporation

(a) General Journal

Date Debit Credit

DR CR

Account Titles

Page 4

COMPREHENSIVE PROJECT, cont. Round all numbers if necessary to -0- decimals (to the nearest dollar, do not show cents). (b)

DR CR

Cash

Accounts Receivable

Inventory

Debt Investments

Land

Buildings

Equipment

Allowance for Doubtful Accounts

Accumulated Depreciation – Buildings

Accumulated Depreciation – Equipment

Accounts Payable

Interest Payable

Unearned Rent Revenue

Dividends Payable

Income Tax Payable

Bonds Payable

Discount on Bonds Payable

Common Stock ($5 par)

Paid-in Capital in Excess of Par – Common Stock

Preferred Stock ($50 par)

Paid-in Capital in Excess of Par – Preferred Stock

Retained Earnings

Treasury Stock

Cash Dividends

Sales Revenue

Rent Revenue

Loss on sale of Land

Gain on sale of investment

Bad Debts Expense

Interest Expense

Cost of Goods Sold

Depreciation Expense

Other Operating Expenses

Salaries and Wages Expense

Income Tax Expense

Totals

BVD Corporation

Updated Trial Balance

12/31/20XX

Page 5

COMPREHENSIVE PROJECT, cont.

(c)

(d)

For the Year Ended December 31, 20XX

Retained Earnings Statement

BVD Corporation

Income Statement

For the Year Ended December 31, 20XX

BVD Corporation

Page 6

e) BVD Corporation Balance Sheet

12/31/20XX

Page 7

BVD Corporation

Balance Sheet cont.

12/31/20XX

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COMPREHENSIVE PROJECT (Continued)

(f) Statement of Cash Flows: BVD CORPORATION Comparative Balance Sheets December 31 of the previous year

Accounts Receivable (net of AFDA) 35,450 Inventory 105,772 Land 102,200 Buildings 255,850 Equipment 102,120 Accumulated Depreciation-Buildings 63,306 Accumulated Depreciation-Equipment 26,630 Accounts Payable 30,528 Interest Payable 0 Unearned Rent Revenue 32,700 Dividends Payable 0 Income Tax Payable 60,620

Instructions: Use the Balance Sheet for December 31, 20XX and the above ending balances for last year's Balance Sheet accounts to prepare the "Net cash provided by operating activities" section of the Cash Flow Statement below using the indirect method.

BVD CORPORATION Statement of Cash Flows December 31, 20XX

Cash flows from operating activities

Net income $

Adjustments to reconcile net income to

net cash provided by operating activities

Add: Depreciation Expense $

Add: Loss on sale of Land

Less: Gain on sale of Debt investments

Increase in accounts receivable

Decrease in inventory

Increase in accounts payable

Decrease in unearned rent revenue

Increase in interest payable

Increase in dividends payable

Decrease in income taxes payable

Net cash provided by operating activities $

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COMPREHENSIVE PROJECT (Continued)

(g) Calculating Ratios, page 1:

Instructions Step 1: Using the ratios as found in our textbook, calculate the following for the BVD Corp. using the numbers you've arrived at in the project.

Instructions Step 2: For each of the ratios below, analyze and describe how BVD Corp.'s ratio compares to its nearest competitor, Walmart, Inc. See Appendix E in the back of your textbook for Walmart's annual financial statements. Use the most current year, 2020, for your calculations.

Note: Be sure to show the calculation of Walmart's ratios below!

Additional Note: Round answers to 2 decimal places, as needed. All work must be presented!

1. Working Capital:

2. Current Ratio:

Page 10

COMPREHENSIVE PROJECT (Continued)

(g) Calculating Ratios, page 1:

Instructions Step 1: Using the ratios as found in our textbook, calculate the following for the BVD Corp. using the numbers you've arrived at in the project.

Instructions Step 2: For each of the ratios below, analyze and describe how BVD Corp.'s ratio compares to its nearest competitor, Walmart, Inc. See Appendix E in the back of your textbook for Walmart's annual financial statements. Use the most current year, 2020, for your calculations.

Note: Be sure to show the calculation of Walmart's ratios below!

Additional Note: Round answers to 2 decimal places, as needed. All work must be presented!

3. Return on Stockholders' Equity: (use ending Common Stockholders' Equity, not average. Common Stockholders' Equity does not include par value of preferred stock.)

4. EPS: (assume all shares are already weighted) and use "Basic" (not "Diluted") for Walmart

5. Payout Ratio:

Page 11

COMPREHENSIVE PROJECT (Continued)

(g) Calculating Ratios, page 1:

Instructions Step 1: Using the ratios as found in our textbook, calculate the following for the BVD Corp. using the numbers you've arrived at in the project.

Instructions Step 2: For each of the ratios below, analyze and describe how BVD Corp.'s ratio compares to its nearest competitor, Walmart, Inc. See Appendix E in the back of your textbook for Walmart's annual financial statements. Use the most current year, 2020, for your calculations.

Note: Be sure to show the calculation of Walmart's ratios below!

Additional Note: Round answers to 2 decimal places, as needed. All work must be presented!

6. Debt to Assets Ratio:

7. Times Interest Earned:

8. Free Cash Flow (after dividends have been paid):

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