Business Administration $285$

Assignment #$2$

Winter $2024$

$1$

Required:

In order to complete the assignment, you are required to put yourself in the role of a

consultant who has been hired by $$Save on Foods Inc. $($SOF$).$

$$ Prepare the required work for each of the following $4$ tasks. Please treat each of the

$4$ tasks separately, meaning don$$t adjust anything in in part $4$ for adjustments made

in part $1.$

Due $-$ Mar $9($Sat$)$ at $1$:$00$ pm$.$ Submit the excel template on UR Courses with the

following name:

$$Bus $285-$ Assignment #$2-$ Lastname, Firstname$$

Sample:

$$Bus $285-$ Assignment #$2-$ Linton, Randy$$

Marks $-$ Worth $2\mathrm{.}5\%$ of your final grade.

$2$

Task #$1-$ Loan:

May $1,2024-$ SOF received a bank loan of $$90,000$ from Conexus Credit Union.

Jun $1,2024-$ SOF spent $$100,000$ to purchase a forklift $($POS$)$ for a total cost of

$$100,000.$ The forklift will be used to move groceries throughout the store. The forklift

will have a $10-$year useful life.

The interest rate on the loan from Conexus is $6\mathrm{.}0\%($compounded only on the loan

principal outstanding$).$ The loan is for $3$ years and will be paid back evenly over $3$ years.

As part of the financing SOF only needs to make the required loan payments each year on

Apr $30.$ Each loan payment will be for $$30,000$ plus any interest owing.

Required:

a$)$ Journal Entries:

$$ Prepare the required journal entries for each of the following dates relating to both

the asset and the loan:

$$ May $1,2024$

$$ Jun $1,2024$

$$ Dec $31,2024$

$$ Apr $30,2025$

$$ Dec $31,2025$

$$ Apr $30,2026$

$$ Dec $31,2026$

$$ Apr $30,2027$

You must show all supporting calculations.

b$)$ Financial Statements:

$$ What will the NBV of the equipment be on the Dec $31,2031$ statement of financial position?

Business Administration $285$

Assignment #$2$

Winter $2024$

$3$

Task #$2-$ Ratios:

For Save of Foods Inc., please calculate and explain the following ratios for $2024$ and

$2025$:

$1)$ Current

$2)$ Debt as a $\%$ of Assets

$3)$ Equity as a $\%$ of Assets

$4)$ Gross margin

$5)$ Profit margin

$6)$ Inventory turnover

$7)$ Inventory turnover $-$ Day in inventory

$8)$ Accounts receivable turnover

$9)$ Accounts receivable turnover $-$ Day in accounts receivable

Notes:

Round as follows:

o Percentage

$95\mathrm{.}44\%=95\mathrm{.}4\%$

$95\mathrm{.}45\%=95\mathrm{.}5\%$

Do not show percentages as $0\mathrm{.}30,$ show as $30\%$

o Numbers

$95\mathrm{.}44=95\mathrm{.}4$

$95\mathrm{.}45=95\mathrm{.}5$

Account Notes

$202520242023$

Sales $-$ Cash basis $120,000115,000110,000$ Customers pay SOF immediately with cash.

Sales $-$ On account $5,0003,0002,000$ Customers are given $30$ days to pay SOF.

Sales $-$ Total $125,000118,000112,000$

Value

$4$

Task #$3-$ Accounts Receivable $-$ Direct Write$-$off Method:

Save of Food Inc. had the following events occur in $2024$ and $2025$ in relation to

accounts receivable.

Notes:

$$ Assume that the allowance for doubtful accounts was at balance of $$0$ on Dec $1,$

$2024.$

$$ SOF already had made previous sales on account that were still outstanding as of Dec

$1,2024.$

Customer Sale Date Amount

Joey Nov $1,2024$ $ $400$

Milu Nov $1,2024$ $ $100$

Regina Pho Oct $1,2024$ $ $40$

THESE SALES HAVE ALREADY HAD THERE INITIAL ACCOUNTING

RECORDED.

Events:

$1)$ On Dec $1,2024$ SOF made the following sales on account:

Customer Sale Date Amount

Browns Social House Dec $1,2024$ $ $200$

Extreme Pita Dec $1,2024$ $ $100$

Regina Pho Dec $1,2024$ $ $60$

$2)$ Dec $28,2024-$ SOF feels that there is a chance that the $$400$ of A$/$R from Joey

could not be collected. This is due to the customer not being happy with the

product$($s$)$ they purchased; however, they are not able to return food after $10$ days.

$3)$ Dec $31,2024-$ SOF updates its allowance for doubtful accounts $($if needed$).$

$4)$ Jan $10,2025-$ SOF is notified that Joey will not be paying their $$400$ of A$/$R$.$

Based upon this notification SOF decided to officially write off the $$400$ of A$/$R$.$

$5)$ Jan $31,2025-$ SOF updates its allowance for doubtful accounts $($if needed$).$

Business Administration $285$

Assignment #$2$

Winter $2024$

$5$

$6)$ Feb $15,2025-$ SOF receives the following cheques:

Customer Sale Date Cheque

Amount

Browns Social House Dec $1,2024$ $ $180$

Extreme Pita Dec $1,2024$ $ $100$

Regina Pho Dec $1,2024$ $ $60$

Joey Nov $1,2024$ $ $150$

Milu Nov $1,2024$ $ $-$

Regina Pho Oct $1,2024$ $ $40$

No other indications of not paying has been received from customers.

$7)$ Feb $28,2025-$ SOF updates its allowance for doubtful accounts $($if needed$).$

Required:

a$)$ Journal Entries:

$$ Journal Entries $-$ Prepare the required journal entries for the above dates using the

$$Direct Write$-$Off$$ method.

b$)$ Financial Statements:

$$ What will the NBV of the accounts receivable be on the Dec $31,2024$ statement

of financial position?

c$)$ Financial Statements:

$$ What will the NBV of the accounts receivable be on the Feb $28,2025$ statement of

financial position?

$6$

Task #$4-$ Accounts Receivable $-$ Allowance Method:

ATTEMPT THIS, but it is not part of your mark.

Save of Food Inc. had the following events occur in $2024$ and $2025$ in relation to

accounts receivable.

Notes