3 4 Bert is planning to start a bicyde shop. He is exploring different options for fronding his business, and 5 trying to decide whether he should focus more on bicyde repairs and maintenance, selling new bicydes 6 or a balance of both activities. The following transactions and financial statements remine the frondial 7 impact of each option he is considering 8 Plan A Primarily debt funded from creditors focus on service repairs & maintenance requires more investment in equipment and higher salary expense for more skilled workers.) 10 Plan & Primarily equity funded from stockholderst focus on merchandise sales: Incurs higher rent expense for nicer showroom 12 Elan Balonces debt and equity funding Balances earning revenue from service and merchandise sales 9 11 16 17 14 Requirements: 15 1. Ust the annual transactions for your plan in the Horizontal Transaction Analysis table. (20 points) - Indicate the increase / decrease) to each account involved in the transaction Identify the type of cash flow activity for all cash transactions (OA Operating, la investing. FA Financing) Record the closing Entry for each year by zeroing out the temporary accounts and transferring the net income to retained earninus - Calculate the total in each column at the end of the each year. - Permanent account balances will carry forward from one year to the next, so year end totals -18 19 20 21 22 will accumulate through the years. 23 25 27 24 2. Use the Horizontal Transaction Analysis balances and the details from the transactions each year to create the following Financial Statements for each year (10 points) 26 Income Statement / Statement of Stockholders Equity / Balance Sheet / Statement of Cash Flows 28 3. Use the financial statement information and the transaction details to answer the following questions 29 Show all calculations to support your response. (20 points) 30 Balance in Notes Payable 12/31/re Make another Loan Repayment on 1/1/+5 same as Yr.38 4 12 Balance in Notes Payable @ 12/31/15 22 Interest Expense for Year S (12/31/yrs balance x 8%) 31 34 35 Equipment Account Balance 12/31/d 36 Accumulated Depreciation Balance 12/31/4 37 Rook Value of Equipment 12/31 38 Sale of Equipment for $6,500 on 1/1/15 19 Amount of Gain or out on Sale of equipment $6,500 10 4Debt to Assets Ratio (Total Liabilities / Total Assets for Year 47 42 Equity to Assets Ratio (Total SE/Total Assets) for Year 47 44 4. Submit the project by Sunday, June 20th 45 -Type your responses Into this document 46 - Save it with your name on it, and subrnit it through Blackboard 47 3 4 Bert is planning to start a bicyde shop. He is exploring different options for fronding his business, and 5 trying to decide whether he should focus more on bicyde repairs and maintenance, selling new bicydes 6 or a balance of both activities. The following transactions and financial statements remine the frondial 7 impact of each option he is considering 8 Plan A Primarily debt funded from creditors focus on service repairs & maintenance requires more investment in equipment and higher salary expense for more skilled workers.) 10 Plan & Primarily equity funded from stockholderst focus on merchandise sales: Incurs higher rent expense for nicer showroom 12 Elan Balonces debt and equity funding Balances earning revenue from service and merchandise sales 9 11 16 17 14 Requirements: 15 1. Ust the annual transactions for your plan in the Horizontal Transaction Analysis table. (20 points) - Indicate the increase / decrease) to each account involved in the transaction Identify the type of cash flow activity for all cash transactions (OA Operating, la investing. FA Financing) Record the closing Entry for each year by zeroing out the temporary accounts and transferring the net income to retained earninus - Calculate the total in each column at the end of the each year. - Permanent account balances will carry forward from one year to the next, so year end totals -18 19 20 21 22 will accumulate through the years. 23 25 27 24 2. Use the Horizontal Transaction Analysis balances and the details from the transactions each year to create the following Financial Statements for each year (10 points) 26 Income Statement / Statement of Stockholders Equity / Balance Sheet / Statement of Cash Flows 28 3. Use the financial statement information and the transaction details to answer the following questions 29 Show all calculations to support your response. (20 points) 30 Balance in Notes Payable 12/31/re Make another Loan Repayment on 1/1/+5 same as Yr.38 4 12 Balance in Notes Payable @ 12/31/15 22 Interest Expense for Year S (12/31/yrs balance x 8%) 31 34 35 Equipment Account Balance 12/31/d 36 Accumulated Depreciation Balance 12/31/4 37 Rook Value of Equipment 12/31 38 Sale of Equipment for $6,500 on 1/1/15 19 Amount of Gain or out on Sale of equipment $6,500 10 4Debt to Assets Ratio (Total Liabilities / Total Assets for Year 47 42 Equity to Assets Ratio (Total SE/Total Assets) for Year 47 44 4. Submit the project by Sunday, June 20th 45 -Type your responses Into this document 46 - Save it with your name on it, and subrnit it through Blackboard 47