create the journal entries, income statement and balance sheet

Project #2 This project has 2 distinct parts. The first part is the creation of journal entries, Income Statement and Balance Sheet. No T-accounts are required to be turned in. The second part is using ratios to evaluate two public companies and making conclusions. Grading: The project will be graded on the following scale: Requirement Part 1: Journal Entries: Accounts used, Type included and Amount Income Statement and Balance Sheet: Accounts correctly summarized and correct presentation Strategic Question Part 2: Ratios: Correct formula and Ratio Strategic Question Both Parts: Overall Presentation: Professional, clear and typed - no electronic submissions TOTAL Points 60 10 10 10 5 5 100 Due Date: Part 1 is due on November 20th Part 2 is due on December 4th However, both parts can be turned in together and anytime earlier. Part 1: You start your own business, \"Float Your Boat.\" Your new company manufactures and sells white water rafts and related equipment. Most of the rafts and equipment you purchase and sell but you want to expand to manufacturing what you sell. You currently manufacture yourself most of the paddles you sell out of specially treated wood. You want to create an accurate set of accounting records so you are able to get funding from other people and/or banks. So, even though you are not a public company yet, you want to create the same financial statements that you would if you were a public company. Below are economic events that may impact your accounting records. Create journal entries for those events and complete the Income Statement and Balance Sheet for the period ending July 31 th. Remember, you may need to create adjusting journal entries. You record journal entries as the events occur but no adjusting entries are needed each month, only for the period ending July 31 st. The business is new so there are no opening balances. Event 1 2 Date May 15 May 15 3 4 5 6 May 21 May 22 June 1 June 1 7 8 9 10 June 5 June 5 June 6 June 10 11 12 13 June 10 June 11 June 20 14 15 June 30 July 1 16 July 1 17 July 5 18 July 10 19 July 15 20 July 15 21 22 July 15 July 20 23 24 July 22 July 28 25 July 30 Event You contribute your own money to the corporate bank account You file incorporation papers and pay cash for the fee. Your Articles of incorporation provide that \"Float Your Boat\" authorize (can issue) 1,000 shares of common stock (par value $1 per share). You own 100% of these via your contribution made on the same day. Acquire office supplies on account Acquire inventory that includes rafts and equipment on account Rented store space and paid cash for 6 months' rent in advance Purchased on account furniture and racks for store. These items are expected to last 5 years with no residual value First sale! Sold a basic raft (no warranty) on account Paid cash for website and advertising Bought wood to make paddles that you will sell Paid cash to lower amount due for previously purchased office supplies Sold rafting equipment on account Collected cash from account receivables A customer special ordered and paid cash for 2 paddles with engravings to match his tattoos. These will be completed and delivered mid-July You realized you have used half of your supplies Hired a sales person for the store and gave them a hiring bonus. The salary is 2,000 a month, paid monthly on the last day of each month Borrowed money from the bank at a 6% annual interest rate. You expect to pay 10% of this off during this year. Sold a high-end raft that comes with a 5 year warranty. You expect that claims will come in each year that equals 1% of the selling price of rafts that come with the warranty. Delivered the special order paddles from June 20 and charged a delivery fee Customer returned some rafting equipment purchased on June 2nd and you gave them a refund Bought more wood for paddles with the terms of 2/10, n/30 and you pay for them the same day with cash Paid freight to ship the wood for paddles to you (freight-in) Sold one of the pieces of furniture that was in your store that you paid $300 for and had purchased on June 1 Declared a dividend Sold two raft (his and hers) to a couple that just got married. You gave them a 2% discount. Paid the dividend Amount 100,000 100 900 5,000 18,000 20,000 600 400 200 300 400 200 2,000 450 500 100,000 1,500 50 80 800 before any discount 60 200 .25 per share 1,000 before any discount .25 per share Part 1 Continued: Strategic Question: Since \"Float Your Boat\" is new, there are many decisions the owner will have to make as his/her business grows. If you were the accountant instead of the business owner, what advice or recommendations would you give the owner for improvement or for future consideration? This can be anything that we have covered in class: compensation of employees, inventory method, etc... Part 2: Find and copy the Income Statement and Balance Sheet of two publically traded companies that are in the same industry. You must include these copies with your turned in project. Calculate the following ratios: 1 2 3 4 5 6 7 8 9 10 Ratio Current Ratio Quick Ratio Total Debt to Total Assets Total Debt to Total Equity Return on Stockholder's Equity Gross Profit Rate or Percentage Return on Sale or Profit margin Return on Assets Earnings Per Share Price to Earnings (P to E) Strategic Question: Which of the two companies would you invest in and why? Found in Chapter: 4 4 9 9 4 4 4 4 2 2 Supplement to Project 2 1. Remember that Income Statement accounts impact the balance sheet through Retained Earnings. This can be accomplished by creating closing entries for the income statement account balances (income and expenses) after the income statement is prepared. 2. Cost of items: a. June 5 - rafts $300 b. June 10 - $150 c. June 20 - $800 d. July 5 - $700 e. July 28 - $600 each 3. Event #4 - Use accounts \"Rafts\" and \"Raft Equipment\" and split the dollar amount equally ($2,500 each account) 4. Event #13 - $2,000 is for the set of 2 paddles 5. Event #18 - \"Float Your Boat\" charged the delivery fee. No third party like UPS was used. The customer paid cash for the delivery fee of $50. (If you had them charge this on account, that is ok too) 6. Event 20 - You received the discount when you paid for the wood