BBI is an economic development corporation situated on B First Nation. BBI has formed a company called Band Limited and requires the financial statements to be prepared and analyzed for the year ended December 31, 2019.

The following are the balances in the accounts at December 31 2018:

Cash- $602,900

Accounts receivable-$10,000

Merchandise inventory-$3000

Prepaid rent-$3,150

Equipment-$55,000

Accumulated depreciation-$13,750

Land-$40,000

Accounts payable-$0

Long-term note payable-$200,000

Common shares-$440,000

Retained earnings-$60,300

The following transactions and events occurred in 2019.

Jan. 1 Jan. 1 Jan. 1

Apr. 1 July 1 Aug. 1 Sept. 1 Oct. 31 Dec. 30

Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31

-Issued $50,000 of 5% preferred shares for cash.

-Sold the equipment at its written-down value (book value) for cash.

-Acquired new equipment for $150,000 cash. The new equipment has an estimated useful life of 15 years and no expected residual value.

-Purchased inventory for $80,000 cash from ordinary suppliers.

-Paid rent in advance of $3,200 on a six-month office lease.

-Made cash sales of $150,000. The related cost of goods sold was $65,000.

-Purchased additional land for cash of $20,000.

-All remaining accounts receivable were collected.

-Various operating expenses totaled $40,000. All were paid in cash except for $5,000 for utilities, which will be paid in January.

-Paid the annual dividend on the preferred shares, and a 5-cent dividend per common share.

-Paid the interest on the bank loan.

-Recorded depreciation for the new equipment.

-Recorded rent expense for 2019.

-Paid cash of $3,800 for income taxes.

Required

(a) Using either journal entries or the transactions-based approach (tabular analysis), record the above transactions and events for 2019. (28 marks)

(b) Prepare an income statement for the year 2019. (11 marks)

(c) Prepare a statement of changes in equity for the year 2019. (5 marks)

(d) Prepare a balance sheet as at December 31, 2019.

(e) using the financial statements you prepared, calculate the following-

(i) Return on assets ratio

(ii) Return on equity ratio

(iii) Gross profit percentage

(iv) Return on sales ratio

(v) Net income to sales ratio

(vi) Earnings per share

(vii) Dividend payout ratio

(viii) Receivables turnover ratio

(ix) Inventory turnover ratio

(x) Asset turnover ratio

(xi) Current ratio

(xii) Quick ratio

(xiii) Debt to equity ratio

(xiv) Debt to assets ratio

Question 1-2 marks BB is an economic development Corporation stated on First Nations has formed a company called Band Limited and requires the financial statements to be prepared and analysed for the year ended December 31, 2019 $2.000 The following are the balances in the accounts at December 31 2018 Cash 5602.900 Accounts receivable $10.000 Merchandise inventory Prepaid rent $3,150, fotoment 555.000 Accumulated depreciation $11.750 Land $40.000 Accounts payable 50 Long-term note payable $200,000 Common shares $40.000 560.000 The following transactions and events occurred in 2019 Jan 1 issued $50,000 of SX preferred shares for cash. I Sold the equipment at its written down value book value for cash Jan. 1 Acquired new equipment for $150.000 cash. The new cugmert has an estimated selle of 15 years and no expected residual value Apr.1 Purchased inventory for $80,000 cash from ordinary suppliers. July Paid rent in advance of $3,200 on a month office lease. Aug 1 Made cash sales of $150.000. The related cost of goods sold was $65.000 Sept Purchased additional and for cash 20,000 Oct. 31 All remaining accounts receivable were collected Dec 30 Various operating expenses totaled 540.000 Al were paid in canh except for 55.000 for vilties, which will be paid in January Det. 31 Paid the annua dividend on the preferred shares, and a 5-centividend per common share Dec 1 Paid the interest on the bank loan Dec. 31 Recorded depreciation for the newest Dec. 31 Recorded rentgene for 2018 Det Paid carb of S. for Income Required Using either journal entries of the transactions based approach tabular anal record the above transactions and events for 2015. 28 marks) Prepare an income Matement for the year 2019. marts id Prepare a statement of changes in ulty for the year 2019. marki Prepare a balance sheets December 31, 2019. 110 marki) Using the financial statements you prepared cake the following 128 mars! Return on assets ratio Return on equity ratio Gross profe percentage M Return on sales ratio MNet income to saler vil Earnings per share Dividend payout ratio Receivables turnover ratio ) Inventory turnover Asset turnover ratio [xl] Current Quick ratio Debt to equity ratio xil Debt to set Question 2 - 12 marks (2 marks each) You are on the Board of BBI. The company recently sent you its annual financial statements. Required (a) Why has the company done this? (b) When would you expect to receive the statements? (c) What information would you expect to get from the income statement? (d) What information would you expect to get from the statement of retained earnings? (e) What information would you expect to get from the balance sheet? (f) In what ways could you use this information to make an informed choice about investing and lending decisions