CASE: NEWBIE TAKES CHARGE You have just been hired as the Junior Controller for SPI-W, and Billy Bob the Controller wants you to take the Balance Sheet and Income Statement as of June 30, 2021 (Exhibit 1 and 2). and prepare a statement of Cash Flows using the indirect method. The company is a private enterprise and chooses to follow ASPE. The Controller also wants you to evaluate the results from the Statement of Cash Flows, specifically summarize the changes that occurred. In addition, because you have been highly touted by your professor who taught you ACCT 1510 in Fall 2021, Billy Bob wants you to also do an analysis using the financial tools you have learned in the past. They include the following: Current Ratio Debt to Equity Ratio Accounts Receivable Turnover Ratio Inventory Turnover Ratio ROE Additional Data: a. Bought equipment for cash $12,000 b. Paid $6,000 on Long Term Debt C. Issued new shares for $16,000 cash d. No dividends were declared e. Other expenses included depreciation, $5,000; wages, $20,000; taxes $6,000; other, $6,800 f. Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume these expenses were fully paid in cash. SPI-W Balance Sheet June 30, 2021 2021 2020 Assets Cash Accounts Receivable Inventory $ 34,000 35,000 41,000 110,000 $ 29,000 28,000 38,000 95,000 Long-Term Assets Equipment Accumlulated Depreciation 121,000 30,000 $ 91,000 100,000 25,000 $ 75,000 Total Assets $ 201,000 $ 170,000 Current Liabilities Accounts Payable Salaries Payable $ 36,000 $ 1,200 $ 37,200 $ 27,000 $ 1,400 $ 28,400 Long-term Liabilites Notes Payable 38,000 44,000 Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity 88,600 37,200 $ 125,800 72,600 25,000 $ 97,600 Total Liabilities and Shareholders' Equity $ 201,000 $ 170,000 Exhibit 2 SPEW Income Statement June 30, 2021 2021 2020 Revenue Cost of Goods Sold Gross Margin $120,000 70,000 $ 50,000 $ 110,000 67,500 $ 42,500 Expenses: Other Expenses $ 37,800 $ 31,000 Net Income $ 12,200 $ 11,500