B C D E F G H K L M N ASSETS LIABILITIES & OWNERS' EQUITY Cash Filters Vehicles Prepaid Costs Debt Paid-in Capital Retained Earnings YEAR 1 Beginning-of-year activities 1 Founders' Investment, HBS Prize Money $25,000 $25,000 Alumnus Investment $200,000 $200,000 3 Blue Future Contract Charge ($40,000) $40,000 4 Slowsand Filters ($20,000) $20,000 Motorcycles and Trucks ($20,000) $20,000 6 Prepaid Marketing, Brand Ambassador ($100,000) $100,000 Through-the-year activities 7 Revenues $219,000 $219,000 Revenue Underreporting ($32,850) ($32,850) Cost of Revenue, Vendor Compensation ($37,230) ($37,230) 8 Technicians' Wages ($3,600) ($3,600) 9 Local Management Salaries ($120,000) ($120,000) 10 Sales Staff Salaries 11 Water Testing & Filter Maintenance ($10,200) ($10,200) 12 Marketing Expenses ($10,000) ($50,000) ($60,000) 13 Vehicle Expenses ($2,500) ($2,500) 14 Other Costs ($29,784) ($29,784) Year-closing activities 15 Depreciation Blue Future Contract ($2,667) ($2,667) Slowsand Filters ($1,333) ($1,33? Motorcycles and Trucks ($4,000) ($4,006,B C D E F G H K M N casIT V CITICICS ciena nInGALI I alu-in capital nclameu LammmmSy YEAR 2 Opening Balances $17,836 $18,667 $16,000 $87,333 SO $225,000 ($85,164) Beginning-of-year activities 1 Debt $1,000,000 $1,000,000 2 Slowsand Filters ($487,500) $487,500 3 Motorcycles and Trucks ($492,500) $492,500 Through-the-year activities 7 Revenues $8,760,000 $8,760,000 Revenue Underreporting ($1,314,000) ($1,314,000) Cost of Revenue, Vendor Compensation ($1,489,200) ($1,489,200) 8 Technicians' Wages ($120,000) ($120,000) 9 Local Management Salaries ($325,000) ($325,000) 10 Sales Staff Salaries ($36,000) ($36,000) 11 Water Testing & Filter Maintenance ($408,000) ($408,000) 12 Marketing Expenses ($25,000) ($50,000) ($75,000) 13 Vehicle Expenses ($65,000) ($65,000) 14 Other Costs ($1,191,360) ($1,191,360) Year-closing activities 15 Depreciation Blue Future Contract Slowsand Filters O- ($2,667) ($2,667) ($33,83? ($33,833) Motorcycles and Trucks ($102,500) ($102,500) 16 Repay Debt ($1,000,000) ($1,000,000) 17 Interest Charge ($100,000) ($100,000) YEAR 2 CLOSING TOTALS $2,724,276 $472,334 $406,000 $34,666 $0 $225,000 $3,412,276 Copyright Instructions BSE WorksheetASSETS LIABILITIES & OWNERS' EQUITY Cash Filters Vehicles Prepaid Costs Debt Paid-in Capital Retained Earnings YEAR 3 Opening Balances Beginning-of-year activities 1 Slowsand Filters 2 Motorcycles and Trucks Through-the-year activities 7 Revenues Revenue Underreporting Cost of Revenue, Vendor Compensation 8 Technicians' Wages 9 Local Management Salaries 10 Sales Staff Salaries 11 Water Testing & Filter Maintenance 12 Marketing Expenses 13 Vehicle Expenses 14 Other Costs Year-closing activities 15 Depreciation Blue Future Contract Slowsand Filters Motorcycles and Trucks YEAR 3 CLOSING TOTALS $0 SO So So So So soI J" NSTRUC'I'IONS O The following worksheet is called a Balance Sheet Equation Worksheet. The worksheet lists the key events in the life of UWP over years 1 through 3: each of these events is likely to affect the financial statements of UWP. The impact of the events on the UWP Balance Sheet for years 1 and 2 has been sketched out. a. Using the completed transactions from years 1 and 2 as a guide, ll in the worksheet for year 3. b. Now, prepare an Income Statement, Balance Sheet, and Cash Flow Statement for years 2 and 3. c. Do you agree with all of the accounting assumptions in the worksheet? If not, what would you change
