Hello Raheema, This is a continuation of the assignment you completed for me about two weeks ago.

Unit 4 [AC499: Bachelor's Capstone in Accounting] Unit 4 Practice Activity: Financial Report Analysis - Rainbow Paint Co. Note: This is a practice activity to be performed before completing the Assignment for this unit. Also, this is the data to be used as the basis for your Unit 9 Final Project. The solutions for the Unit 4 Practice activity are located here. Rainbow Paint Co.'s comparative financial statements for the years ending December 31, 2013 and 2012 are as follows. The market price of Rainbow Paint Co.'s common stock was $30 on December 31, 1999 and $25 on December 31, 2013. Rainbow Paint Co. Comparative Income Statement For the Years Ended December 31, 2013 and 2012 Sales Sales returns and allowances Net sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Income from operations Other income Income before Interest & Taxes 650,000 Other expense (interest) Income before income tax Income tax expense Net income 2013 $ 5,125,000 125,000 $ 5,000,000 3,400,000 $ 1,600,000 650,000 325,000 $ 975,000 $ 625,000 25,000 $ 105,000 545,000 300,000 $ 245,000 ======== $ Rainbow Paint Co. Comparative Retained Earnings Statement For the Years Ended December 31, 2013 and 2012 2013 Retained earnings, January 1 $ 723,000 Add net income for year 245,000 Total $ 968,000 Deduct dividends: $ 40,000 On preferred stock 45,000 On common stock $ 85,000 Total Retained earnings, December 31 $ 883,000 ======== 2012 $ 3,257,600 57,600 $ 3,200,000 2,080,000 $ 1,120,000 464,000 224,000 $ 688,000 $ 432,000 19,200 $ 451,200 64,000 387,200 176,000 $ 211,200 ======== $ $ $ $ 2012 581,800 211,200 793,000 40,000 30,000 $ 70,000 $ 723,000 ======== Unit 4 [AC499: Bachelor's Capstone in Accounting] Rainbow Paint C0, Comparative Balance Sheet December 31, 2013 and 2012 Assets Current assets: Cash Marketable securities Accounts receivable (net) Inventories Prepaid expenses Total current assets Long-term investments Property, plant, and equipment (net) Total assets Liabilities Current liabilities Long-term liabilities: Mortgage note payable, 10%, due 2016 Bonds payable, 8%, due 2017 Total long-term liabilities Total liabilities Stockholders' Equity Preferred 8% stock, $100 par Common stock, $10 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 2013 $ 175,000 150,000 425,000 720,000 30,000 $ 1,500,000 250,000 2,093,000 $ 3,843,000 ======== $ $ 750,000 $ $ 410,000 800,000 $ 1,210,000 $ 1,960,000 $ 500,000 500,000 883,000 $ 1,883,000 $ 3,843,000 ======== Instructions: Determine the following measures for 2013: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 2012 125,000 50,000 325,000 480,000 20,000 $ 1,000,000 225,000 1,948,000 $ 3,173,000 ======== 650,000 $ 800,000 $ 800,000 $ 1,450,000 $ 500,000 500,000 723,000 $ 1,723,000 $ 3,173,000 ========= Unit 4 [AC499: Bachelor's Capstone in Accounting] 9. Ratio of liabilities to stockholders' equity 10. Number of times interest charges earned 11. Number of times preferred dividends earned 12. Ratio of net sales to assets 13. Rate earned on total assets 14. Rate earned on stockholders' equity 15. Rate earned on common stockholders' equity 16. Earnings per share on common stock 17. Price-earnings ratio 18. Dividends per share of common stock 19. Dividend yield The Unit 4 Assignment is worth 40 Points. Notes: 1) Some of the ratios do NOT have sufficient data to compute a ratio. In those ratios, simply type "Insufficient data to Compute". The objective is to provide you an opportunity to employ critical thinking. You need to be able to discern whether or not all elements are present. 2) In the ratios that require an "Average" - assume that the BEGINNING Account Balance = - 0-. 3) Remember, .50% is NOT the same as 50%. 4) Use all transactions that include "Sales on Account" as "Net Credit Sales". 5) Be sure to include your formulas in the proper cell. If you simply input an answer, feedback may be limited. If you include your computations, additional feedback will be possible when an incorrect answer is given. 6) Complete all ratios in all 3 sections - Parts A, B & C. There are 4 ratios in Part A, 2 in Part B, and 3 in Part C. Complete the Following rations for Quixote Consulting used in Unis 2 and 3. You may use formulas as needed Formula (words) Calculation (numbers) Result A. Liquidity Ratios 1. Current Ratio = = = 2. Acid Test Ratio = = = 3. Inventory turnover = = = times 4. Accounts Receivable turnover = = = times = = = 2. Times-interest-earned ratio = = = B. Solvency Ratios 1. Debt to Total Asset ratio % times C. Profitability Ratios 1. Profit Margin = = = % 2. Asset Turnover = = = % 3. Return on Assets = = = % Unit 4 [AC499: Bachelor's Capstone in Accounting] Unit 4 Assignment: Management Tools Application Step 1: Practice Complete the AC499 Financial Report Analysis - Rainbow Paint Co. as practice for the Unit 4 Assignment. The solutions for the review problem can be found here. Step 2: Review Ratio Sheet Review the AC499 Financial Report Analysis Unit 4 Ratio Sheet. Step 3: Financial Analysis Complete a financial analysis of the company financials for Quixote Consulting. Use the Excel Template titled: "Unit 4 Financial Report Analysis Template.\" Be sure to review the Excel tab titled \"Hints & Instructions\" before you attempt the Assignment tab. Note: This Quixote Company file will be your graded Unit 4 Assignment, not the Rainbow Company Practice Assignment. When you are ready, you may submit your Quixote Ratio Analysis Excel template to the Unit 4 Dropbox page. Note: Include your name in the filename of the Assignment. Very Important Note: The Practice Set is based on data for \"Rainbow Paint Company.\" Do NOT submit the Rainbow solutions in the Unit 4 Assignment Dropbox. The Unit 4 Assignment is based on the Quixote data accumulated in Units 2 and 3. However, The Rainbow Paint Company data will be a VITAL and integral component of your Unit 9 Final Project. So, please complete the Practice Exercise AND keep your work saved in a file for later use. Unit 4 [AC499: Bachelor's Capstone in Accounting] Unit 4 Assignment Rubric: Category Your score Possible Points Instructor Comments Part A - Liquidity ratios: - Current Ratio 5 - Acid test Ratio 5 - Inventory T/O Ratio 5 - A/R T/O Ratio 5 Part B = Solvency Ratios - Debt Ratio 4 - Times Interest Earned Ratio 4 Part C - Profit Ratios - Profit Margin 4 - Asset T/O Ratio 4 - ROA 4 Preliminary Totals 40 Additional Items: Late Penalty (If applicable. Enter a negative amount) Final Total Explanation of other deductions. 40 AC499 Financial Report Analysis Unit 4 Liquidity ratios Liquidity ratios measure the ability of a company to repay its short-term debts and meet unexpected cash needs. Current ratio. The current ratio is also called the working capital ratio, as working capital is the difference between current assets and current liabilities. This ratio measures the ability of a company to pay its current obligations using current assets. The current ratio is calculated by dividing current assets by current liabilities. Acid-test ratio. The acid-test ratio is also called the quick ratio. Quick assets are defined as cash, marketable (or short-term) securities, and accounts receivable and notes receivable, net of the allowances for doubtful accounts. These assets are considered to be very liquid (easy to obtain cash from the assets) and therefore, available for immediate use to pay obligations. The acid-test ratio is calculated by dividing quick assets by current liabilities. The traditional rule of thumb for this ratio has been 1:1. Anything below this level requires further analysis of receivables to understand how often the company turns them into cash. It may also indicate the company needs to establish a line of credit with a financial institution to ensure the company has access to cash when it needs to pay its obligations. Receivables turnover. The receivable turnover ratio calculates the number of times in an operating cycle (normally one year) the company collects its receivable balance. It is calculated by dividing net credit sales by the average net receivables. Net credit sales is net sales less cash sales. If cash sales are unknown, use net sales. Average net receivables is usually the balance of net receivables at the beginning of the year plus the balance of net receivables at the end of the year divided by two. If the company is cyclical, an average calculated on a reasonable basis for the company's operations should be used such as monthly or quarterly. Average collection period. The average collection period (also known as day's sales outstanding) is a variation of receivables turnover. It calculates the number of days it will take to collect the average receivables balance. It is often used to evaluate the effectiveness of a company's credit and collection policies. A rule of thumb is the average collection period should not be significantly greater than a company's credit term period. The average collection period is calculated by dividing 365 by the receivables turnover ratio. Inventory turnover. The inventory turnover ratio measures the number of times the company sells its inventory during the period. It is calculated by dividing the cost of goods sold by average inventory. Average inventory is calculated by adding beginning inventory and ending inventory and dividing by 2. If the company is cyclical, an average calculated on a reasonable basis for the company's operations should be used such as monthly or quarterly. Day's sales on hand. Day's sales on hand is a variation of the inventory turnover. It calculates the number of day's sales being carried in inventory. It is calculated by dividing 365 days by the inventory turnover ratio. Profitability ratios Profitability ratios measure a company's operating efficiency, including its ability to generate income and therefore, cash flow. Cash flow affects the company's ability to obtain debt and equity financing. Profit margin. The profit margin ratio, also known as the operating performance ratio, measures the company's ability to turn its sales into net income. To evaluate the profit margin, it must be compared to competitors and industry statistics. It is calculated by dividing net income by net sales. Asset turnover. The asset turnover ratio measures how efficiently a company is using its assets. The turnover value varies by industry. It is calculated by dividing net sales by average total assets. Return on assets. The return on assets ratio (ROA) is considered an overall measure of profitability. It measures how much net income was generated for each $1 of assets the company has. ROA is a combination of the profit margin ratio and the asset turnover ratio. It can be calculated separately by dividing net income by average total assets or by multiplying the profit margin ratio times the asset turnover ratio. Return on common stockholders' equity. The return on common stockholders' equity (ROE) measures how much net income was earned relative to each dollar of common stockholders' equity. It is calculated by dividing net income by average common stockholders' equity. In a simple capital structure (only common stock outstanding), average common stockholders' equity is the average of the beginning and ending stockholders' equity. In a complex capital structure, net income is adjusted by subtracting the preferred dividend requirement, and common stockholders' equity is calculated by subtracting the par value (or call price, if applicable) of the preferred stock from total stockholders' equity. Earnings per share. Earnings per share (EPS) represents the net income earned for each share of outstanding common stock. In a simple capital structure, it is calculated by dividing net income by the number of weighted average common shares outstanding. Price-earnings ratio. The price-earnings ratio (P/E) is quoted in the financial press daily. It represents the investors' expectations for the stock. A P/E ratio greater than 15 has historically been considered high. Payout ratio. The payout ratio identifies the percent of net income paid to common stockholders in the form of cash dividends. It is calculated by dividing cash dividends by net income. A more stable and mature company is likely to pay out a higher portion of its earnings as dividends. Many startup companies and companies in some industries do not pay out dividends. It is important to understand the company and its strategy when analyzing the payout ratio. Dividend yield. Another indicator of how a corporation performed is the dividend yield. It measures the return in cash dividends earned by an investor on one share of the company's stock. It is calculated by dividing dividends paid per share by the market price of one common share at the end of the period. A low dividend yield could be a sign of a high growth company that pays little or no dividends and reinvests earnings in the business or it could be the sign of a downturn in the business. It should be investigated so the investor knows the reason it is low. Solvency ratios Solvency ratios are used to measure long-term risk and are of interest to long-term creditors and stockholders. Debt to total assets ratio. The debt to total assets ratio calculates the percent of assets provided by creditors. It is calculated by dividing total debt by total assets. Total debt is the same as total liabilities. Times interest earned ratio. The times interest earned ratio is an indicator of the company's ability to pay interest as it comes due. It is calculated by dividing earnings before interest and taxes (EBIT) by interest expense. A times interest earned ratio of 2-3 or more indicates that interest expense should reasonably be covered. If the times interest earned ratio is less than two it will be difficult to find a bank to loan money to the business. Prepare journal entries to record the June transactions in the General Journal below. Date General Journal Description(Account Name) Debit Credit 1-Jun Cash A/c---------------Dr $10,000 Accounts Receivable A/c---------------Dr $1,500 Supplies A/c---------------Dr $1,250 Office Equipment A/c---------------Dr $7,500 To Dustin Larkin Capital A/c $20,250 Total assets recorded 1-Jun Pre-Paid Rent A/c---------------Dr $4,500 Cash $4,500 3 month rent prepaid 2-Jun Pre-Paid Insurance A/c---------------Dr $1,800 Cash $1,800 Insurance Premiums prepaid 4-Jun Cash A/c---------------Dr $3,000 Unearned Fees $3,000 Advanced Payment from client 5-Jun Office Equipment A/c---------------Dr $1,800 Accounts Payable $1,800 Purchased office equipment 6-Jun Cash A/c---------------Dr $800 Accounts Receviable $800 Payment from client on account 10-Jun Miscellaneous Expense A/c---------------Dr $120 Cash $120 Newspaper ads 12-Jun Accounts Payable A/c---------------Dr $800 Cash $800 Paid Crawford Company on account 12-Jun Accounts Receivable A/c---------------Dr $2,250 Fees Earned $2,250 Accounts serviced on June1-12 14-Jun Salary Expense A/c---------------Dr $400 Cash $400 Paid part time receptionist 17-Jun Cash A/c---------------Dr $3,175 Fees Earned $3,175 Account serviced on June1-16 18-Jun Supplies A/c---------------Dr $750 To Cash A/c $750 Paid for supplies 20-Jun Accounts Receivable A/c---------------Dr $1,100 To Cash A/c $1,100 fees earned for June 13-20 24-Jun Cash A/c---------------Dr $1,850 Fees Earned $1,850 fees earned for june 17-24 26-Jun Cash A/c---------------Dr $1,600 Unit 2 [AC499: Bachelor's Capstone in Accounting] Unit 2 Assignment: Management Tools Application For the past several years, Dustin Larkin has operated a part-time consulting business from his home. As of June 1, 2013, Dustin decided to move to rented quarters and to operate the business, which was to be known as Quixote Consulting, on a full-time basis. Quixote Consulting entered into the following transactions during June: June 1. The following assets were received from Dustin Larkin: cash, $10,000; accounts receivable, $1,500; supplies, $1,250; and office equipment, $7,500. There were no liabilities received. June 1. Paid three months' rent on a lease rental contract, $4,500. June 2. Paid the premiums on property and casualty insurance policies, $1,800. June 4. Received cash from clients as an advance payment for services to be provided (Record it as unearned fees), $3,000. June 5. Purchased additional office equipment on account from Crawford Company, $1,800. June 6. Received cash from clients on account, $800. June 10. Paid cash for a newspaper advertisement to run during June, $120. June 12. Paid Crawford Company for part of the debt incurred on June 5, $800. June 12. Recorded services provided on account for the period June 1 to June 12, $2,250. June 14. Paid part-time receptionist for 2 weeks' salary, $400. (Note: Ignore any payroll tax or withholdings). June 17. Recorded cash from cash clients for fees earned during the period June 1-16, $3,175. June 18. Paid cash for supplies, $750. June 20. Recorded services provided on account for the period June 13-20, $1,100. June 24. Recorded cash from cash clients for fees earned for the period June 17-24, $1,850. June 26. Received cash from clients on account, $1,600. June 27. Paid part-time receptionist for two weeks' salary, $400. (Note: Ignore any payroll tax or withholdings). June 29. Paid telephone bill for June, $130. Unit 2 [AC499: Bachelor's Capstone in Accounting] June 30. Paid electricity bill for June, $200. June 30. Recorded cash from cash clients for fees earned for the period June 25-30, $2,050. June 30. Recorded services provided on account for the remainder of June, $1,000. June 30. Dustin withdrew $4,500 for personal use. Instructions-Use the Excel template provided in the class titled \"Unit 2 and 3 Management Tools Assignment\" to complete the following 3 requirements for Unit 2: 1. Journalize each transaction in the two-column journal tab, referring to the following chart of accounts in selecting the accounts to be debited and credited. 11-Cash 31-Dustin Larkin, Capital 12-Accounts Receivable 32-Dustin Larkin, Drawing 14-Supplies 41-Fees Earned 15-Prepaid Rent 51-Salary Expense 16-Prepaid Insurance 52-Rent Expense 18-Office Equipment 53-Supplies Expense 19-Accumulated Depreciation 21-Accounts Payable 22-Salaries Payable 54-Depreciation Expense 55-Insurance Expense 59-Miscellaneous Expense 23-Unearned Fees 2. Post the journal to a ledger of four-column accounts, see the Excel tab labeled accordingly. 3. Prepare a trial balance as of June 30, 2013 - using the tab in the Excel workbook labeled accordingly. Be sure and save your work, you will complete the accounting cycle in Unit 3 using the same Excel Template and information. Unit 2 [AC499: Bachelor's Capstone in Accounting] Notes: 1) Proper Journal Entry Formatting is absolutely mandatory. a. Debit Account Descriptions are to be fully left-justified in the line. b. Credit Account Descriptions are to be indented in the cell. c. A short description is required for every journal entry. 2) You will be required to create at least ONE additional general Ledger Account to accommodate a few Journal Entries. 3) You may need to add the \"Miscellaneous Expense" account to the General Ledger. 4) Or, you may create 2 or 3 new G/L accounts. For example "Utilities." 5) Be sure that you use proper formatting when you create the Financial Statements. For example: a. Add required underlining, b. "$" signs must be properly formatted. 6) The templates are NOT fully \"pre-formatted.\" You must re-format them for proper presentation in a number of places. Remember, if you have any questions, concerns, or doubts about any of the instructions, please contact your instructor in the Virtual Office as soon as possible. AC 499 Unit 2 Rubric: Category Your score Possible Points 0 15 1-Prepare the Initial Journal Entries. Scoring Criteria: (13 - 15 Points): Entries use accurate accounts and amounts; and debits and credits are used correctly. (10 - 12 Points): Journal Entries mostly use accurate accounts and amounts; and debits and credits are used correctly. (7.5 - 9 Points): Journal Entries have some errors in use of accounts and amounts; debits and credits are only somewhat used correctly. Instructor Comments Unit 2 [AC499: Bachelor's Capstone in Accounting] (0 - 7 Points): Journal Entries have some errors in use of accounts and amounts; and debits and credits are not used correctly. 2-Post the journal entries to the G/L. Scoring Criteria: (13 - 15 Points): Posting is correct - trial balance is accurate. (10 - 12 Points): Posting and T/B are mostly correct. 0 15 0 10 0 40 0 40 (7.5 - 9 Points): Posting and T/B have several errors. (0 - 7 Points): Posting and T/B have significant errors. 3-Prepare the Unadjusted Trial Balance. Scoring Criteria: (9 - 10 Points): All Accounts properly presented in correct order with correct balances. (7 - 8 Points): Trial Balance mostly correct, 1 or 2 accounts listed incorrectly, 1 or 2 balances incorrect, and based on carry-forward errors from Parts 1 & 2. (5 - 6 Points): Trial Balance has several errors, but they are independent of any carry forward errors. (0 - 4 Points): Trial Balance is poorly prepared, numerous errors, balances incorrect, accounts out of order. Preliminary Totals Additional Items: Deductions for uncorrected errors from Unit 2 (Enter negative amount -->) Late Penalty (If applicable) (Enter as a negative amount -->) Final Total This sheet provides the answers to the PRACTICE Problem based on the Rainbow Paint Company Data The sheet titled "Detail Computations" gives the specific ratio computations. Ratio 1 Working capital 2 Current ratio 3 Quick ratio 4 Accounts receivable turnover 5 Number of days' sales in receivables 6 Inventory turnover 7 Number of days' sales in inventory 8 Ratio of fixed assets to long-term liabilities 9 Ratio of liabilities to stockholders' equity 10 Number of times interest charges earned 11 Number of times preferred dividends earned 12 Ratio of net sales to assets 13 Rate earned on total assets 14 Rate earned on stockholders' equity 15 Rate earned on common stockholders' equity 16 Earnings per share on common stock 17 Price-earnings ratio 18 Dividends per share of common stock 19 Dividend yield Solution $750,000.00 2 1 13.33 Times 27.38 Days 5.67 64.41 Days 1.73 1.04 6.19 Times 6.13 Times 1.43 6.98% 13.59% 3.93% $4.10 6.1 $0.90 3.60% Rainbow Paint Co. Comparative Income Statement For the Years Ended December 31, 2013 and 2012 Rainbow Paint Co.'s comparative financial statements for the years ending December 31, 2013 and 2012 are as follows. The market price of Rainbow Paint Co.'s common stock was $30 on December 31, 1999 and $25 on December 31, 2013. 2013 2012 $5,125,000 $3,257,600 125,000 57,600 $5,000,000 $3,200,000 3,400,000 2,080,000 $1,600,000 $1,120,000 $650,000 $464,000 325,000 224,000 $975,000 $688,000 $625,000 $432,000 25,000 19,200 $650,000 $451,200 Other expense (interest) 105,000 64,000 Income before income tax $545,000 $387,200 Income tax expense 300,000 176,000 Net income $245,000 $211,200 Rainbow Paint Co. Comparative Retained Earnings Statement For the Years Ended December 31, 2013 and 2012 Sales Sales returns and allowances Net sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Income from operations Other income Retained earnings, January 1 Add net income for year Total Deduct dividends: On preferred stock On common stock Total Retained earnings, December 31 2013 $723,000 245,000 $968,000 2012 $581,800 211,200 $793,000 $40,000 45,000 $85,000 $883,000 $40,000 30,000 $70,000 $723,000 Instructions Determine the following measures for 2013: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders' equity 10.Number of times interest charges earned 11.Number of times preferred dividends earned 12.Ratio of net sales to assets 13.Rate earned on total assets 14.Rate earned on stockholders' equity 15.Rate earned on common stockholders' equity 16. Earnings per share on common stock 17. Price-earnings ratio 18. Dividends per share of common stock 19. Dividend yield This column contains the CORRECTED ratios. Formulas in cells. Refigured Formulas $750,000.00 current assets - current liabilities 2.00 current assets/current liabilities 1.00 cash + short term investments +AR / current liabilities 13.33 net sales/average gross receivables 27.38 Gross receivables/(annual net sales /365) 27.375 Cost of Goods Sold/Average inventory 5.67 64.41 (Ending inventory / cost of goods sold) X 365 64.411765 1.73 fixed assets/ long term liabilities 1.04 liabilities/stockholders equity 6.19 Income before taxes and interest charges /interest charges 6.13 Net income available to Preferred Stockholders/annual Preferred Dividends Requirement 1.43 net sales/average total assets 6.98% net income/average total assets 0.1633333 13.59% net income/ average stockholders equity 3.93% net income less preferred dividends (common stock) / average common stockholders equity $4.10 net income less preferred dividends (common stock)/ Shares of common stock 6.10 market price per share of common stock/ earnings per share of common stock $0.90 dividends on common stock /# of shares of common stock 3.60% dividends per share of common stock/ market price per share of common stock 5000 # shares of preferred stock 50000 # of common stock shares Rainbow Paint Co. Comparative Balance Sheet December 31, 2013 and 2012 0.32 required return on the stock Assets Current assets: Cash Marketable securities Accounts receivable (net) Inventories Prepaid expenses Total current assets Long-term investments Property, plant, and equipment (net) 2013 2012 $175,000 150,000 425,000 720,000 30,000 $1,500,000 250,000 2,093,000 $125,000 50,000 325,000 480,000 20,000 $1,000,000 225,000 1,948,000 Total assets Liabilities Current liabilities Long-term liabilities: Mortgage note payable, 10%, due 2009 $3,843,000 $3,173,000 $750,000 $650,000 Bonds payable, 8%, due 2012 Total long-term liabilities Total liabilities Stockholders' Equity Preferred 8% stock, $100 par Common stock, $10 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 800,000 $1,210,000 $1,960,000 $800,000 $800,000 $1,450,000 $500,000 500,000 883,000 $1,883,000 $3,843,000 $500,000 500,000 723,000 $1,723,000 $3,173,000 50000 50000 Shares of Common Stock eps market value/common share $410,000 - 205000.00 0.04 Prepare journal entries to record the June transactions in the General Journal below. Date General Journal Description(Account Name) Debit Credit 1-Jun Cash A/c---------------Dr $10,000 Accounts Receivable A/c---------------Dr $1,500 Supplies A/c---------------Dr $1,250 Office Equipment A/c---------------Dr $7,500 To Dustin Larkin Capital A/c $20,250 Total assets recorded 1-Jun Pre-Paid Rent A/c---------------Dr $4,500 Cash $4,500 3 month rent prepaid 2-Jun Pre-Paid Insurance A/c---------------Dr $1,800 Cash $1,800 Insurance Premiums prepaid 4-Jun Cash A/c---------------Dr $3,000 Unearned Fees $3,000 Advanced Payment from client 5-Jun Office Equipment A/c---------------Dr $1,800 Accounts Payable $1,800 Purchased office equipment 6-Jun Cash A/c---------------Dr $800 Accounts Receviable $800 Payment from client on account 10-Jun Miscellaneous Expense A/c---------------Dr $120 Cash $120 Newspaper ads 12-Jun Accounts Payable A/c---------------Dr $800 Cash $800 Paid Crawford Company on account 12-Jun Accounts Receivable A/c---------------Dr $2,250 Fees Earned $2,250 Accounts serviced on June1-12 14-Jun Salary Expense A/c---------------Dr $400 Cash $400 Paid part time receptionist 17-Jun Cash A/c---------------Dr $3,175 Fees Earned $3,175 Account serviced on June1-16 18-Jun Supplies A/c---------------Dr $750 To Cash A/c $750 Paid for supplies 20-Jun Accounts Receivable A/c---------------Dr $1,100 To Cash A/c $1,100 fees earned for June 13-20 24-Jun Cash A/c---------------Dr $1,850 Fees Earned $1,850 fees earned for june 17-24 26-Jun Cash A/c---------------Dr $1,600 The Unit 4 Assignment is worth 40 Points. Notes: 1) Some of the ratios do NOT have sufficient data to compute a ratio. In those ratios, simply type "Insufficient data to Compute". The objective is to provide you an opportunity to employ critical thinking. You need to be able to discern whether or not all elements are present. 2) In the ratios that require an "Average" - assume that the BEGINNING Account Balance = - 0-. 3) Remember, .50% is NOT the same as 50%. 4) Use all transactions that include "Sales on Account" as "Net Credit Sales". 5) Be sure to include your formulas in the proper cell. If you simply input an answer, feedback may be limited. If you include your computations, additional feedback will be possible when an incorrect answer is given. 6) Complete all ratios in all 3 sections - Parts A, B & C. There are 4 ratios in Part A, 2 in Part B, and 3 in Part C. Complete the Following rations for Quixote Consulting used in Unis 2 and 3. You may use formulas as needed Formula Calculation (words) (numbers) Result A. Liquidity Ratios 1. Current Ratio = Current Assets Current Liabilities = 17,995 3,120 = 5.77 2. Acid Test Ratio = Current Assets - Inventories Current Liabilities = 12325 3,120 = 3.95 3. Inventory turnover = Cost of goods sold Average inventory = Net Sales Average accounts receivable = 12,425 3450 = 3.60 times 3,120 23,675 = 0.13 4. Accounts Receivable turnover = = Insufficient data to Compute B. Solvency Ratios 1. Debt to Total Asset ratio = Debt Total assets = 2. Times-interest-earned ratio = EBIT + Interest Interest = = % Insufficient data to Compute times C. Profitability Ratios 1. Profit Margin = Net Income Sales = 7925 12425 = 63.78% % 2. Asset Turnover 3. Return on Assets = = Sales Average assets = Net Income + Other expenses Average assets = 12425 26795 = 7925 26795 = 46.37% % 29.58% % Quixote Consulting Income Statement For the Month Ended June 30, 2010 Revenues: Fees Earned $12,425 Expenses: Salary Expenses 920 Rent Expense 1,500 Supplies Expense 980 Depreciation Expense 500 Insurance Expense 150 Miscellaneous Expense 450 Total Expenses 4,500 Net Income $7,925 Quixote Consulting Statement of Owners Equity For the Month Ended June 30, 2010 Dustin Larkin Capital June 1 $Add: Additional Investment 20250 Add: Net Income 7,925 Subtotal 28,175 Less: Drawings 4,500 Dustin Larkin Capital June 30 $23,675 Quixote Consulting Balance Sheet June 30, 2010 Assets: Current Assets Cash 8,875 Accounts Receivable 3,450 Supplies 1,020 Prepaid Rent 3,000 Prepaid insurance 1,650 17,995 Noncurrent Assets Office Equipment 9,300 Less: Accumulated Depreciation 500 8,800 Total Assets $26,795 Liabilities: Accounts Payable 1,000 Salaries Payable 120 Unearned fees 2,000 Total Liabilities 3,120 Stockholders' Equity: Dustin Larkin, Capital 23,675 Total Stockholders' Equity 23,675 Total Liabilities & Stockholders' Equity $26,795