Question
Answer the following: a) Was the partnership business profitable in its first year of operation? Explain your answer. b) How will you describe the capital
Answer the following: a) Was the partnership business profitable in its first year of operation? Explain your answer.
b) How will you describe the capital investment of the two partners after operating their partnership business for one year?
c) Will you advise Romy and Pio to continue their business operation? Why?
d) How can the knowledge of accounting help Romy and Pio in making their landscaping business sustainable and in the process achieve the goal for the company in doing business for profit, people, and the planet (i.e., 3Ps or the triple bottom line)?
e) Using your answer in letter D, give 2 examples of how Romy and Pio can use the accounting information gathered in increasing profit while making more sustainable business decisions.
f) What suggestions can you give to partners Romy and Pio regarding the management of the business' "Cash" account. The given are: -10-column worksheet:
RP Landscaping and Plant Services | ||||||||||
Adjusted Trial Balance | ||||||||||
December 31, 2024 | ||||||||||
Unadjusted | Adjusted | Income | Statement of | |||||||
Trial balance | Adjustments | Trial balance | Statement | Financial Position | ||||||
Account Title | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
Cash | 2,828,500 | 2,828,500 | 2,828,500 | |||||||
Accounts Receivable | 145,000 | 145,000 | 145,000 | |||||||
Allowance for Bad Debts | 7,500 | 7,000 | 14,500 | 14,500 | ||||||
Notes Receivable | 80,000 | 80,000 | 80,000 | |||||||
Interest Receivable | 9,600 | 9,600 | 9,600 | |||||||
Advances to Employees | 12,000 | 12,000 | 12,000 | |||||||
Prepaid Rent | 240,000 | 120,000 | 120,000 | 120,000 | ||||||
Landscaping Supplies on Hand | 218,750 | 158,500 | 60,250 | 60,250 | ||||||
Office Equipment | 97,000 | 97,000 | 97,000 | |||||||
Accumulated Depreciation - Office Equipment | 18,000 | 9,000 | 27,000 | 27,000 | ||||||
Landscaping Equipment | 320,000 | 320,000 | 320,000 | |||||||
Accumulated Depreciation - Landscaping Equipment | 60,000 | 30,000 | 90,000 | 90,000 | ||||||
Landscaping Tools | 120,000 | 120,000 | 120,000 | |||||||
Accumulated Depreciation - Landscaping Tools | 22,000 | 11,000 | 33,000 | 33,000 | ||||||
Accounts Payable | 35,500 | 35,500 | 35,500 | |||||||
Unearned Service Income | 48,000 | 24,000 | 24,000 | 24,000 | ||||||
Income Tax Payable | ||||||||||
Utilities Payable | 14,500 | 14,500 | 14,500 | |||||||
Interest Payable | 3,000 | 3,000 | 3,000 | |||||||
Notes Payable due in 3 years | 75,000 | 75,000 | 75,000 | |||||||
Romy, Capital | 1,000,000 | 1,000,000 | 1,000,000 | |||||||
Romy, Drawing | 25,000 | 25,000 | 25,000 | |||||||
Pio, Capital | 1,000,000 | 1,000,000 | 1,000,000 | |||||||
Pio, Drawing | 10,000 | 10,000 | 10,000 | |||||||
Service Income | 2,700,000 | 24,000 | 2,724,000 | 2,724,000 | ||||||
Interest Income | 9,600 | 9,600 | 9,600 | |||||||
Salaries and Wages Expense | 656,000 | 656,000 | 656,000 | |||||||
Income Tax Expense | ||||||||||
Utilities Expense | 90,750 | 14,500 | 105,250 | 105,250 | ||||||
Landscaping Supplies Expense | 158,500 | 158,500 | 158,500 | |||||||
Transportation Expense | 90,000 | 90,000 | 90,000 | |||||||
Rent Expense | 120,000 | 120,000 | 120,000 | |||||||
Repairs and Maintenance Expense | 14,400 | 14,400 | 14,400 | |||||||
Depreciation Expense | 50,000 | 50,000 | 50,000 | |||||||
Bad Debts Expense | 7,000 | 7,000 | 7,000 | |||||||
Advertising Expense | 12,000 | 12,000 | 12,000 | |||||||
Miscellaneous Expense | 6,600 | 6,600 | 6,600 | |||||||
Interest Expense | 3,000 | 3,000 | 3,000 | |||||||
Total | 4,966,000 | 4,966,000 | 386,600 | 386,600 | 5,050,100 | 5,050,100 | 1,222,750 | 2,733,600 | 3,827,350 | 2,316,500 |
Net Income | 1,510,850 | 1,510,850 | ||||||||
Total | 2,733,600 | 2,733,600 | 3,827,350 | 3,827,350 |
- Cash Flows
RP Landscaping and Plant Services | ||||||
Statement of Cash Flows (Direct Method) | ||||||
For the Month Ended December 31, 2024 | ||||||
Cash Flows from Operating Activities: | ||||||
Cash service fee from landscaping customers | 2,635,000 | |||||
Cash received representing unearned service income | 48,000 | |||||
Payment of salaries to employees | (656,000) | |||||
Payment of utilities expenses | (90,750) | |||||
Payment of transportation expenses | (90,000) | |||||
Payment of various repairs and maintenance expenses | (14,400) | |||||
Payment of advertising expenses | (12,000) | |||||
Payment of various miscellaneous expenses | (6,600) | |||||
Cash advance given to employee | (12,000) | |||||
Net cash provided by operating activities | 1,801,250 | |||||
Cash Flows from Investing Activities: | ||||||
Purchase of landscaping supplies | (218,750) | |||||
Net cash used in investing activities | (218,750) | |||||
Cash Flows from Financing Activities: | ||||||
Payment of rent | (240,000) | |||||
Proceeds of the 3 years promissory note | 75,000 | |||||
Romys cash withdrawal | (25,000) | |||||
Pio's cash withdrawal | (10,000) | |||||
Net cash used in financing activities | 40,000 | |||||
Net increase in cash for the year: | ||||||
Net cash inflows from operating activities | 1,801,250 | |||||
Cash inflows from financing activities | 40,000 | |||||
Cash outflows from investing activities | (218,750) | |||||
Net increase in cash for the year | 1,622,500 | |||||
Cash balance, January 1, 2024 | 1,446,000 | |||||
Net increase in cash for the year | 1,622,500 | |||||
Cash balance, December 31, 2024 | 3,068,500 | |||||
-Change in Partners' Equity
RP Landscaping and Plant Services | |||||||||
Statement of Changes in Partners' Equity | |||||||||
For the Month Ended Decemeber 31, 2024 | |||||||||
Romy | Pio | Total | |||||||
Capital, December 1, 2024 | 1,000,000 | 1,000,000 | 2,000,000 | ||||||
Net income | 1,510,850 | 1,510,850 | 3,021,700 | ||||||
Sub-total | 2,510,850 | 2,510,850 | 5,021,700 | ||||||
Drawing | (25,000) | (10,000) | (35,000) | ||||||
Capital, December 31, 2024 | 2,485,850 | 2,500,850 | 4,986,700 | ||||||
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