I need this project done by 4/20/17 midnight.

It isn't very hard, just dont have time to complete.

Please let me know if you have any questions.

Instructions and excel attached to this question.

Please email to t..o@yahoo.com

ACCT4111 Project: Accounting Data Analyses Students as Business Advisors: Preparing financial statements and analyzing business implications INTRODUCTION The transition from principles of accounting to intermediate level accounting can be abrupt for students, and instructors can wrongly assume that every student is able to apply the skills that are learned in prior courses when they attempt intermediate level tasks. This practice set provides a transition from principles of accounting to the intermediate level necessary for this course. In addition, it serves to alert students to the foundational skills that they will need for future coursework in intermediate accounting. The practice set involves traditional accounting cycle basics (journal entries and adjusting entries) in a setting that is more realistic than typical textbook practice sets. In addition, it also goes beyond the introductory level of principles of accounting by having students study the resultant financial data and provide the client with advice about the financial status of their small plumbing business. Output to be submitted: Please submit your excel spreadsheet and one-page memo through iCollege before the deadline (no hardcopy needed). Apart from cases of emergency or force majeure, late assignments or work submitted through email will not be accepted. Please write your (and all coauthors') name and surname in the yellow box in the top-left corner of App. A, together with your Group Number. NOTE: only Microsoft Office compatible formats will be accepted (e.g., xls, xlsx for the spreadsheet, doc, docx, pdf or the memo). File extensions like .pages or .numbers will NOT be graded. You can work in groups (up to three students per group) or individually, whatever works best for you. Please check the slides on iCollege (in the folder \"Other Documents\") for instructions on how to form groups and for some additional guidance on the assignment. CLIENT BACKGROUND Your professional career has commenced! You just finished a meeting with Jag and Elk, two plumbers who merged their start-up plumbing businesses two years ago. Jag's residential customers are all on a prepaid service contract basis. For a fixed fee paid in advance, customers get three years of plumbing services (total $648, $18 per month) regardless of the number of service calls, nature of the service, or materials needed. Elk's commercial business is a parts delivery service known for having every part in stock and same day delivery so that \"your labor crew doesn't stall out for lack of a part\". Both have agreed not to draw any salaries from the business and split dividends only after they have paid off all the business debt. Both lead simple lives, so they are able to work part-time with another plumbing business in the next town on the weekends to pay their bills until their business is big enough to support both of them. Upon merging their businesses into Jag & Elk Pipes, Jag and Elk obtained a loan and with the proceeds, they bought a 2014 Nissan truck equipped with plumbing tools and rented a small warehouse in midtown. They pay one part-time worker at the warehouse to manage inventory and customer service. When they are on-site for a residential client, they deliver parts to commercial clients either before work, on their lunch hour, or after the residential jobs are complete for the day. Neither Jag nor Elk have any financial background but they keep a basic record of activity for tax purposes. Their banker requires a set of accrual basis financial statements annually. Given your newfound accounting expertise, they have asked you to help. In addition to creating the financial statements for the bank, they have requested that you analyze the profitability and liquidity of their company. THE CLIENT MEETING Jag: \"Here are balances in our accounts at the beginning of the year (Appendix A). We have two sets of records other than the checkbook. We keep a job log of all our trips, one for residential clients and one for commercial clients (Appendix B). We keep track of who has paid us on this log and also record the date and the materials used on each trip. We also have a listing of all our residential contracts (Appendix C).\" Elk: \"We don't write that many checks but I have summarized all the checks written during 2015 and the inventory details for you on this schedule (Appendix D). When we bought the Nissan truck for $47,000 in 2014, we estimated that it would last about six years and be worth about $5,000 at the end of the sixth year. When we bought the tools for the truck in 2014, we paid $7,600 and we estimated that they would last about three years and be worth about $400 at the end of the three years. We use the straight line method of depreciation. The annual insurance policy on the truck and warehouse expired on 3/31/15, but we had already paid for it in 2014. We got a new annual insurance policy on 4/1/15 and we have paid the entire annual premium in advance, so no further payments will be required \" Jag: \"Our bank note is at 9.5% annual interest and matures on June 1st, 2020 but we hope we can pay it off earlier. Our effective tax rate is 15%. The one thing that we haven't paid for yet is the last two weeks of payroll costs for our part-time worker of $600.\" Elk: \"Our accountant last year asked us if we thought any of our credit customers might not be able to pay us and we just guessed. However, we ended up collecting everything from last year. For the current customers, I would guess 2% of the uncollected amount at year end as an estimate for future bad debts.\" REQUIREMENTS Prepare Financial Statements Prepare three financial statements: 1) Income Statement (either multiple step or single step); 2) Balance Sheet (add income to retained earnings); 3) Cash Flow statement (use the indirect method). Present them in good form on the separate \"Financial Statement\" worksheet tab in the excel project file. Format your statements to look professional - e.g. even margins, centered on the page, appropriate title on top of page, everything labeled nicely and linked to the appropriate trial balances (link amounts to trial balances, use excel formulae instead of typing in computed results by hand), so that if the client changes any amounts, the financial statements automatically update. Analyze the Business and Communicate Your Findings Review the client's financial results for 2015. Analyze the profitability of the company using the profitability ratios of the DuPont formula (use ending values of total assets and total equity instead of annual averages). Analyze the liquidity of the company by computing the current ratio and the quick ratio. In a separate Microsoft Word file, write the client a short memo (300 word maximum) giving them clear and concise feedback based on the profitability and liquidity analysis that you performed. Exhibits do not count in the word limit. Your memo should support your analysis with observations and explanations that help the client understand your findings. Use specific but short explanations. You may use charts or exhibits to show financial relationships that help illustrate your thoughts. Jag and Elk are busy and not interested in sweet talk or bragging about how hard you have worked. Get right to the pointgive an overview of all important issues, and then explain these issues in the following paragraphs. Avoid off-topic comments and do not mention ideas or balances that do not support your stance on the important issues that you are drawing to the client's attention. Use simple language as much as possible. Your client is a financial novice who is not familiar with technical financial or accounting jargon. Important: In most Excel cells, formulas or functions should be typed, such as \"=A1+B1-C1\" or \"=sum(A1:A10)\" instead of numbers. Where should you start? It is recommended to identify Service Revenue first. The revenue is recognized when the actual service is performed for commercial customers, but evenly over time for residential customers. Then find all cash transactions. The next step would be to identify Accounts Receivable and Unearned Revenue. Notice that residential customers pay cash in advance and receive service later over time, but commercial customers receive service first and pay cash later. Additional TIPS to Analyze Appendix Information: Appendix B: - Identify the total price of commercial services delivered during the year - Find the total amount of cash collection during the year from commercial customers - Compute the cost of parts inventory consumed for commercial and residential services ("consumed" is not necessarily the same as cash payment) Appendix C: - Identify Unearned Revenue at the end of each year - Record Realized Revenue during the year - Find total amount of cash collection during the year from residential customers Appendix D: - Make additional proper journal entries for given information Financial Statements - Prepare "formal" financial statements in a new tab: B/S, I/S and C/F - Notice that there is no Investing or Financing Activities for C/F statement Group number: Author(s): 1) Surname, Name; 2) Surname, Name; 3) Surname, Name. Cash Accounts Receivable - Commercial Less: Allowance for bad debts - Commercial Parts Inventory Prepaid insurance Plumbing equipment and tools Less: Accumulated depreciation, equip & tools Plumbing truck Less: Accumulated depreciation, trucks Salaries payable Interest Payable Taxes payable Notes payable Unearned revenues Common stock Retained earnings Residential sales revenue CommercIal sales revenue Cost of sales - residential Cost of sales - commercial Salaries and Wage expense Truck operating expenses Depreciation expense for equip. and tools Rent and utilities expense Office supplies expense Bad debt expense Insurance expense Interest expense Tax expense Total Post Closing trial Balance 1/1/2015 debit $ 21,248 $ 2,050 credit $ 73 $ 19,102 $ 1,149 $ 7,600 $ 1,183 $ 47,000 $ 3,500 $ $ $ $ 50,000 14,238 15,000 14,155 $ 98,149 $ 98,149 Cumulative effect of 2015 entries debit credit Adjusted trial Balance 12/31/2015 debit credit Service date 1/1/2015 1/6/2015 1/11/2015 1/12/2015 1/16/2015 1/18/2015 1/22/2015 1/23/2015 1/26/2015 1/28/2015 1/29/2015 2/1/2015 2/8/2015 2/9/2015 2/13/2015 2/17/2015 2/20/2015 2/25/2015 2/28/2015 3/1/2015 3/4/2015 3/7/2015 3/13/2015 3/17/2015 3/23/2015 3/24/2015 3/25/2015 3/29/2015 3/31/2015 4/6/2015 4/10/2015 4/15/2015 4/18/2015 4/19/2015 4/25/2015 4/30/2015 5/1/2015 5/7/2015 5/13/2015 5/15/2015 5/19/2015 5/21/2015 5/27/2015 6/1/2015 6/5/2015 6/6/2015 6/10/2015 6/12/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Commercial Invoices Billed Cash Collection Date 1,656.00 1/13/2015 1,362.00 1/23/2015 886.00 2/1/2015 1,002.00 2/16/2015 549.00 2/27/2015 1,395.00 2/24/2015 294.00 2/13/2015 642.00 3/10/2015 891.00 3/16/2015 1,387.00 3/18/2015 654.00 2/20/2015 1,147.00 3/15/2015 627.00 3/6/2015 936.00 3/10/2015 743.00 2/28/2015 307.00 4/7/2015 817.00 4/10/2015 326.00 3/18/2015 1,271.00 4/1/2015 892.00 4/16/2015 1,069.00 3/23/2015 1,324.00 3/18/2015 586.00 4/11/2015 1,179.00 4/11/2015 285.00 4/3/2015 818.00 5/8/2015 1,077.00 4/25/2015 734.00 5/3/2015 726.00 5/2/2015 1,501.00 5/8/2015 1,473.00 5/8/2015 1,242.00 5/26/2015 1,509.00 5/1/2015 983.00 5/16/2015 1,123.00 308.00 5/12/2015 1,189.00 5/18/2015 1,159.00 5/22/2015 727.00 5/24/2015 928.00 6/3/2015 229.00 6/17/2015 1,305.00 6/19/2015 1,037.00 6/18/2015 749.00 6/11/2015 334.00 6/16/2015 1,209.00 7/10/2015 1,429.00 6/21/2015 309.00 7/4/2015 cost of parts $ 910.00 $ 374.00 $ 365.00 $ 200.00 $ 296.00 $ 502.00 $ 176.00 $ 342.00 $ 267.00 $ 416.00 $ 392.00 $ 717.00 $ 564.00 $ 582.00 $ 204.00 $ 147.00 $ 408.00 $ 196.00 $ 635.00 $ 584.00 $ 583.00 $ 361.00 $ 195.00 $ 589.00 $ 85.00 $ 334.00 $ 359.00 $ 293.00 $ 356.00 $ 546.00 $ 642.00 $ 496.00 $ 528.00 $ 536.00 $ 411.00 $ 100.00 $ 396.00 $ 478.00 $ 303.00 $ 334.00 $ 75.00 $ 427.00 $ 377.00 $ 449.00 $ 148.00 $ 332.00 $ 669.00 $ 123.00 Residential Services date cost of parts 1/4/2015 $ 223.00 1/6/2015 $ 1/10/2015 $ 12.00 1/11/2015 $ 40.00 1/12/2015 $ 1/16/2015 $ 105.00 1/19/2015 $ 371.00 1/21/2015 $ 28.00 1/25/2015 $ 1/29/2015 $ 6.00 1/31/2015 $ 327.00 2/1/2015 $ 2/5/2015 $ 2/7/2015 $ 28.00 2/9/2015 $ 169.00 2/13/2015 $ 2/16/2015 $ 2/18/2015 $ 25.00 2/19/2015 $ 139.00 2/20/2015 $ 7.00 2/24/2015 $ 2/25/2015 $ 2/27/2015 $ 2/28/2015 $ 72.00 3/2/2015 $ 9.00 3/5/2015 $ 150.00 3/6/2015 $ 3/9/2015 $ 93.00 3/11/2015 $ 33.00 3/12/2015 $ 3/15/2015 $ 40.00 3/16/2015 $ 157.00 3/20/2015 $ 3/23/2015 $ 41.00 3/25/2015 $ 44.00 3/28/2015 $ 3/30/2015 $ 8.00 4/3/2015 $ 37.00 4/6/2015 $ 8.00 4/10/2015 $ 4/11/2015 $ 53.00 4/14/2015 $ 73.00 4/16/2015 $ 4/18/2015 $ 4/21/2015 $ 47.00 4/23/2015 $ 62.00 4/25/2015 $ 124.00 4/27/2015 $ - 6/14/2015 6/17/2015 6/20/2015 6/21/2015 6/25/2015 6/27/2015 6/28/2015 6/30/2015 7/4/2015 7/10/2015 7/11/2015 7/16/2015 7/21/2015 7/24/2015 7/26/2015 7/31/2015 8/1/2015 8/2/2015 8/5/2015 8/9/2015 8/14/2015 8/19/2015 8/21/2015 8/26/2015 8/28/2015 9/1/2015 9/3/2015 9/8/2015 9/9/2015 9/10/2015 9/14/2015 9/15/2015 9/16/2015 9/20/2015 9/25/2015 9/26/2015 9/30/2015 10/1/2015 10/7/2015 10/10/2015 10/15/2015 10/19/2015 10/21/2015 10/24/2015 10/29/2015 11/2/2015 11/7/2015 11/9/2015 11/15/2015 11/16/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1,186.00 1,488.00 464.00 711.00 1,282.00 1,059.00 935.00 1,011.00 1,494.00 178.00 741.00 541.00 1,207.00 1,751.00 1,482.00 389.00 1,449.00 260.00 843.00 426.00 867.00 1,428.00 209.00 1,018.00 1,428.00 1,323.00 1,410.00 358.00 529.00 785.00 701.00 1,588.00 400.00 872.00 387.00 580.00 1,692.00 828.00 430.00 729.00 840.00 792.00 391.00 1,434.00 423.00 1,235.00 996.00 777.00 180.00 993.00 7/4/2015 7/5/2015 7/27/2015 7/3/2015 7/30/2015 7/15/2015 7/30/2015 8/19/2015 7/31/2015 7/25/2015 7/29/2015 8/17/2015 8/18/2015 8/9/2015 8/5/2015 8/28/2015 9/6/2015 9/8/2015 9/6/2015 8/26/2015 8/31/2015 8/30/2015 9/11/2015 9/11/2015 10/9/2015 10/12/2015 9/19/2015 10/13/2015 9/19/2015 10/20/2015 10/6/2015 10/21/2015 10/4/2015 10/7/2015 10/28/2015 10/10/2015 10/26/2015 11/4/2015 11/21/2015 10/27/2015 11/10/2015 11/25/2015 11/30/2015 12/3/2015 12/8/2015 12/6/2015 12/15/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 783.00 446.00 185.00 426.00 615.00 577.00 612.00 449.00 597.00 96.00 494.00 295.00 592.00 963.00 444.00 212.00 782.00 156.00 562.00 136.00 476.00 779.00 91.00 333.00 467.00 635.00 307.00 148.00 396.00 428.00 153.00 693.00 133.00 465.00 190.00 208.00 465.00 264.00 215.00 318.00 504.00 518.00 215.00 473.00 259.00 617.00 358.00 427.00 132.00 361.00 4/28/2015 4/29/2015 5/2/2015 5/3/2015 5/6/2015 5/8/2015 5/10/2015 5/12/2015 5/14/2015 5/15/2015 5/17/2015 5/20/2015 5/22/2015 5/24/2015 5/27/2015 5/30/2015 6/3/2015 6/6/2015 6/8/2015 6/11/2015 6/14/2015 6/16/2015 6/19/2015 6/21/2015 6/24/2015 6/26/2015 6/29/2015 7/3/2015 7/5/2015 7/9/2015 7/11/2015 7/12/2015 7/15/2015 7/17/2015 7/18/2015 7/22/2015 7/23/2015 7/24/2015 7/26/2015 7/30/2015 7/31/2015 8/2/2015 8/4/2015 8/8/2015 8/9/2015 8/13/2015 8/16/2015 8/19/2015 8/20/2015 8/23/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 96.00 108.00 7.00 27.00 39.00 74.00 31.00 24.00 9.00 111.00 49.00 17.00 66.00 160.00 61.00 82.00 3.00 24.00 20.00 273.00 27.00 26.00 5.00 11.00 1.00 102.00 20.00 6.00 20.00 8.00 74.00 - 11/22/2015 11/26/2015 12/1/2015 12/2/2015 12/6/2015 12/12/2015 12/13/2015 12/15/2015 12/20/2015 12/26/2015 12/29/2015 $ $ $ $ $ $ $ $ $ $ $ 219.00 849.00 412.00 356.00 1,634.00 316.00 1,177.00 1,193.00 497.00 1,543.00 1,637.00 12/22/2015 12/17/2015 12/19/2015 12/28/2015 $ $ $ $ $ $ $ $ $ $ $ 65.00 254.00 225.00 71.00 681.00 105.00 317.00 477.00 112.00 577.00 515.00 8/24/2015 8/25/2015 8/28/2015 9/1/2015 9/3/2015 9/7/2015 9/11/2015 9/15/2015 9/19/2015 9/21/2015 9/24/2015 9/28/2015 10/2/2015 10/3/2015 10/4/2015 10/7/2015 10/11/2015 10/14/2015 10/16/2015 10/18/2015 10/21/2015 10/22/2015 10/23/2015 10/27/2015 10/29/2015 11/2/2015 11/3/2015 11/7/2015 11/11/2015 11/13/2015 11/14/2015 11/17/2015 11/19/2015 11/23/2015 11/26/2015 11/27/2015 11/28/2015 11/29/2015 11/30/2015 12/1/2015 12/5/2015 12/8/2015 12/9/2015 12/12/2015 12/14/2015 12/15/2015 12/19/2015 12/21/2015 12/25/2015 12/27/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 56.00 15.00 18.00 50.00 189.00 67.00 9.00 3.00 99.00 8.00 12.00 33.00 68.00 89.00 52.00 23.00 43.00 309.00 12.00 53.00 1.00 56.00 15.00 1.00 28.00 72.00 61.00 14.00 36.00 82.00 13.00 75.00 13.00 452.00 2.00 18.00 - 12/30/2015 $ 12.00 INFORMATION: Commercial Invoices: Service Date: The date when the service has been delivered Billed: The amount of service billed to customers Cash Collection Date: The date of cash collection, blank if uncollected by the end of year Cost of Parts: Cost of parts for each service Residential Services: Date: The date when the service has been delivered Cost of Parts: Cost of parts for each service Residential client R 101 R 102 R 103 R 104 R 105 R 106 R 107 R 108 R 109 R 110 R 111 R 112 R 113 R 114 R 115 R 116 R 117 R 118 R 119 R 120 R 121 R 122 R 123 R 124 R 125 R 126 R 127 R 128 R 129 R 130 R 131 R 132 R 133 R 134 R 135 R 136 R 137 R 138 R 139 R 140 R 141 R 142 R 143 R 144 R 145 R 146 R 147 R 148 date paid date effective 1/1/2014 1/1/2014 1/30/2014 2/1/2014 2/26/2014 3/1/2014 3/28/2014 4/1/2014 4/26/2014 5/1/2014 5/26/2014 6/1/2014 5/26/2014 6/1/2014 5/26/2014 6/1/2014 6/24/2014 7/1/2014 6/24/2014 7/1/2014 6/24/2014 7/1/2014 7/24/2014 8/1/2014 7/24/2014 8/1/2014 7/24/2014 8/1/2014 7/24/2014 8/1/2014 7/24/2014 8/1/2014 8/23/2014 9/1/2014 8/23/2014 9/1/2014 8/23/2014 9/1/2014 8/23/2014 9/1/2014 9/21/2014 10/1/2014 9/21/2014 10/1/2014 9/21/2014 10/1/2014 9/21/2014 10/1/2014 10/21/2014 11/1/2014 11/19/2014 12/1/2014 1/30/2015 2/1/2015 2/26/2015 3/1/2015 3/28/2015 4/1/2015 3/28/2015 4/1/2015 4/26/2015 5/1/2015 4/26/2015 5/1/2015 5/26/2015 6/1/2015 5/26/2015 6/1/2015 5/26/2015 6/1/2015 5/26/2015 6/1/2015 6/24/2015 7/1/2015 6/24/2015 7/1/2015 6/24/2015 7/1/2015 6/24/2015 7/1/2015 6/24/2015 7/1/2015 7/24/2015 8/1/2015 8/23/2015 9/1/2015 8/23/2015 9/1/2015 8/23/2015 9/1/2015 9/21/2015 10/1/2015 10/21/2015 11/1/2015 11/19/2015 12/1/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ fee 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 R 149 R 150 11/19/2015 11/19/2015 12/1/2015 12/1/2015 $ $ 648.00 648.00 Assumptions and business details outlined by client in initial meeting : Useful life of 2014 Nissan Truck (use straight line method) Salvage value of 2014 Nissan Truck Useful life of tools purchased in 2014 for startup (use straight line method) Salvage value of tools 6 years $ 5,000.00 3 years $ 400.00 Annual interest rate on note payable due 2020 Effective tax rate 9.50% 15.00% Cash Received : Beginning A/R + As specified in Appendiices B and C Checkbook details show these payments: Interest payments during 2015 Paid annual insurance policy on truck and warehouse, effective 4/1/15 Paid for gas, oil, repairs on truck Paid for Inventory purchases during year Rent and utilities for the year (all paid in year) Office supplies purchased for cash, consider all used up Estimated tax deposits paid during year Salaries and Wages for part time worker $ $ $ $ $ $ $ $ 4,000.00 6,000.00 4,000.00 70,000.00 9,600.00 200.00 400.00 9,000.00 Pending amounts and other data: Last two week of wages and payroll taxes for part time worker $ 600.00 Estimated bad debts: all open AR's at year end 2.00% Name: Cash Accounts Receivable - Commercial Less: Allowance for bad debts - Commercial Parts Inventory Prepaid insurance Plumbing equipment and tools Less: Accumulated depreciation, equip & tools Plumbing truck Less: Accumulated depreciation, trucks Salaries payable Interest Payable Taxes payable Notes payable Unearned revenues Common stock Retained earnings Residential sales Commercial sales Cost of sales - residential Cost of sales - commercial Salaries and Wage expense Truck operating expenses Depreciation expense Rent and utilities expense Office supplies expense Bad debt expense Insurance expense Interest expense Tax expense Total Post Closing trial Balance 1/1/2015 debit 21,248.00 2,050.00 credit 2015 transactions debit 103,038.00 98,678.00 73.00 19,102.00 1,149.00 7,600.00 70,000.00 6,000.00 1,183.00 47,000.00 3,500.00 4,000.00 400.00 50,000.00 14,238.00 15,000.00 14,155.00 98,149.00 98,149.00 - 14,238.00 6,271.00 42,651.00 9,600.00 4,000.00 9,366.67 9,600.00 200.00 264.84 5,649.00 4,750.00 5,417.32 394,123.83 - 2015 transactions credit 103,200.00 87,486.00 264.84 48,922.00 5,649.00 Adjusted trial Balance 12/31/2015 debit 21,086.00 13,242.00 credit 337.84 40,180.00 1,500.00 7,600.00 2,366.67 3,549.67 47,000.00 7,000.00 600.00 4,750.00 5,417.32 10,500.00 600.00 750.00 5,017.32 50,000.00 15,000.00 14,155.00 29,790.00 98,678.00 29,790.00 98,678.00 394,123.83 - 6,271.00 42,651.00 9,600.00 4,000.00 9,366.67 9,600.00 200.00 264.84 5,649.00 4,750.00 5,417.32 228,377.83 228,377.83 - Service date 1/1/2015 1/6/2015 1/11/2015 1/12/2015 1/16/2015 1/18/2015 1/22/2015 1/23/2015 1/26/2015 1/28/2015 1/29/2015 2/1/2015 2/8/2015 2/9/2015 2/13/2015 2/17/2015 2/20/2015 2/25/2015 2/28/2015 3/1/2015 3/4/2015 3/7/2015 3/13/2015 3/17/2015 3/23/2015 3/24/2015 3/25/2015 3/29/2015 3/31/2015 4/6/2015 4/10/2015 4/15/2015 4/18/2015 4/19/2015 4/25/2015 4/30/2015 5/1/2015 5/7/2015 5/13/2015 5/15/2015 5/19/2015 5/21/2015 5/27/2015 6/1/2015 6/5/2015 6/6/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Commercial Invoices Billed Cash Collection Date 1,656.00 1/13/2015 1,362.00 1/23/2015 886.00 2/1/2015 1,002.00 2/16/2015 549.00 2/27/2015 1,395.00 2/24/2015 294.00 2/13/2015 642.00 3/10/2015 891.00 3/16/2015 1,387.00 3/18/2015 654.00 2/20/2015 1,147.00 3/15/2015 627.00 3/6/2015 936.00 3/10/2015 743.00 2/28/2015 307.00 4/7/2015 817.00 4/10/2015 326.00 3/18/2015 1,271.00 4/1/2015 892.00 4/16/2015 1,069.00 3/23/2015 1,324.00 3/18/2015 586.00 4/11/2015 1,179.00 4/11/2015 285.00 4/3/2015 818.00 5/8/2015 1,077.00 4/25/2015 734.00 5/3/2015 726.00 5/2/2015 1,501.00 5/8/2015 1,473.00 5/8/2015 1,242.00 5/26/2015 1,509.00 5/1/2015 983.00 5/16/2015 1,123.00 308.00 5/12/2015 1,189.00 5/18/2015 1,159.00 5/22/2015 727.00 5/24/2015 928.00 6/3/2015 229.00 6/17/2015 1,305.00 6/19/2015 1,037.00 6/18/2015 749.00 6/11/2015 334.00 6/16/2015 1,209.00 7/10/2015 cost of parts $ 910.00 $ 374.00 $ 365.00 $ 200.00 $ 296.00 $ 502.00 $ 176.00 $ 342.00 $ 267.00 $ 416.00 $ 392.00 $ 717.00 $ 564.00 $ 582.00 $ 204.00 $ 147.00 $ 408.00 $ 196.00 $ 635.00 $ 584.00 $ 583.00 $ 361.00 $ 195.00 $ 589.00 $ 85.00 $ 334.00 $ 359.00 $ 293.00 $ 356.00 $ 546.00 $ 642.00 $ 496.00 $ 528.00 $ 536.00 $ 411.00 $ 100.00 $ 396.00 $ 478.00 $ 303.00 $ 334.00 $ 75.00 $ 427.00 $ 377.00 $ 449.00 $ 148.00 $ 332.00 Residential Services date cost of parts 1/4/2015 $ 223.00 1/6/2015 $ 1/10/2015 $ 12.00 1/11/2015 $ 40.00 1/12/2015 $ 1/16/2015 $ 105.00 1/19/2015 $ 371.00 1/21/2015 $ 28.00 1/25/2015 $ 1/29/2015 $ 6.00 1/31/2015 $ 327.00 2/1/2015 $ 2/5/2015 $ 2/7/2015 $ 28.00 2/9/2015 $ 169.00 2/13/2015 $ 2/16/2015 $ 2/18/2015 $ 25.00 2/19/2015 $ 139.00 2/20/2015 $ 7.00 2/24/2015 $ 2/25/2015 $ 2/27/2015 $ 2/28/2015 $ 72.00 3/2/2015 $ 9.00 3/5/2015 $ 150.00 3/6/2015 $ 3/9/2015 $ 93.00 3/11/2015 $ 33.00 3/12/2015 $ 3/15/2015 $ 40.00 3/16/2015 $ 157.00 3/20/2015 $ 3/23/2015 $ 41.00 3/25/2015 $ 44.00 3/28/2015 $ 3/30/2015 $ 8.00 4/3/2015 $ 37.00 4/6/2015 $ 8.00 4/10/2015 $ 4/11/2015 $ 53.00 4/14/2015 $ 73.00 4/16/2015 $ 4/18/2015 $ 4/21/2015 $ 47.00 4/23/2015 $ 62.00 6/10/2015 6/12/2015 6/14/2015 6/17/2015 6/20/2015 6/21/2015 6/25/2015 6/27/2015 6/28/2015 6/30/2015 7/4/2015 7/10/2015 7/11/2015 7/16/2015 7/21/2015 7/24/2015 7/26/2015 7/31/2015 8/1/2015 8/2/2015 8/5/2015 8/9/2015 8/14/2015 8/19/2015 8/21/2015 8/26/2015 8/28/2015 9/1/2015 9/3/2015 9/8/2015 9/9/2015 9/10/2015 9/14/2015 9/15/2015 9/16/2015 9/20/2015 9/25/2015 9/26/2015 9/30/2015 10/1/2015 10/7/2015 10/10/2015 10/15/2015 10/19/2015 10/21/2015 10/24/2015 10/29/2015 11/2/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1,429.00 309.00 1,186.00 1,488.00 464.00 711.00 1,282.00 1,059.00 935.00 1,011.00 1,494.00 178.00 741.00 541.00 1,207.00 1,751.00 1,482.00 389.00 1,449.00 260.00 843.00 426.00 867.00 1,428.00 209.00 1,018.00 1,428.00 1,323.00 1,410.00 358.00 529.00 785.00 701.00 1,588.00 400.00 872.00 387.00 580.00 1,692.00 828.00 430.00 729.00 840.00 792.00 391.00 1,434.00 423.00 1,235.00 6/21/2015 7/4/2015 7/4/2015 7/5/2015 7/27/2015 7/3/2015 7/30/2015 7/15/2015 7/30/2015 8/19/2015 7/31/2015 7/25/2015 7/29/2015 8/17/2015 8/18/2015 8/9/2015 8/5/2015 8/28/2015 9/6/2015 9/8/2015 9/6/2015 8/26/2015 8/31/2015 8/30/2015 9/11/2015 9/11/2015 10/9/2015 10/12/2015 9/19/2015 10/13/2015 9/19/2015 10/20/2015 10/6/2015 10/21/2015 10/4/2015 10/7/2015 10/28/2015 10/10/2015 10/26/2015 11/4/2015 11/21/2015 10/27/2015 11/10/2015 11/25/2015 11/30/2015 12/3/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 669.00 123.00 783.00 446.00 185.00 426.00 615.00 577.00 612.00 449.00 597.00 96.00 494.00 295.00 592.00 963.00 444.00 212.00 782.00 156.00 562.00 136.00 476.00 779.00 91.00 333.00 467.00 635.00 307.00 148.00 396.00 428.00 153.00 693.00 133.00 465.00 190.00 208.00 465.00 264.00 215.00 318.00 504.00 518.00 215.00 473.00 259.00 617.00 4/25/2015 4/27/2015 4/28/2015 4/29/2015 5/2/2015 5/3/2015 5/6/2015 5/8/2015 5/10/2015 5/12/2015 5/14/2015 5/15/2015 5/17/2015 5/20/2015 5/22/2015 5/24/2015 5/27/2015 5/30/2015 6/3/2015 6/6/2015 6/8/2015 6/11/2015 6/14/2015 6/16/2015 6/19/2015 6/21/2015 6/24/2015 6/26/2015 6/29/2015 7/3/2015 7/5/2015 7/9/2015 7/11/2015 7/12/2015 7/15/2015 7/17/2015 7/18/2015 7/22/2015 7/23/2015 7/24/2015 7/26/2015 7/30/2015 7/31/2015 8/2/2015 8/4/2015 8/8/2015 8/9/2015 8/13/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 124.00 96.00 108.00 7.00 27.00 39.00 74.00 31.00 24.00 9.00 111.00 49.00 17.00 66.00 160.00 61.00 82.00 3.00 24.00 20.00 273.00 27.00 26.00 5.00 11.00 1.00 102.00 20.00 6.00 20.00 8.00 11/7/2015 11/9/2015 11/15/2015 11/16/2015 11/22/2015 11/26/2015 12/1/2015 12/2/2015 12/6/2015 12/12/2015 12/13/2015 12/15/2015 12/20/2015 12/26/2015 12/29/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 996.00 777.00 180.00 993.00 219.00 849.00 412.00 356.00 1,634.00 316.00 1,177.00 1,193.00 497.00 1,543.00 1,637.00 98,678.00 $ 12/18/2015 12/26/2016 12/15/2015 12/22/2015 12/17/2015 12/19/2015 12/28/2015 87,486.00 $ 358.00 $ 427.00 $ 132.00 $ 361.00 $ 65.00 $ 254.00 $ 225.00 $ 71.00 $ 681.00 $ 105.00 $ 317.00 $ 477.00 $ 112.00 $ 577.00 $ 515.00 $ 42,651.00 8/16/2015 8/19/2015 8/20/2015 8/23/2015 8/24/2015 8/25/2015 8/28/2015 9/1/2015 9/3/2015 9/7/2015 9/11/2015 9/15/2015 9/19/2015 9/21/2015 9/24/2015 9/28/2015 10/2/2015 10/3/2015 10/4/2015 10/7/2015 10/11/2015 10/14/2015 10/16/2015 10/18/2015 10/21/2015 10/22/2015 10/23/2015 10/27/2015 10/29/2015 11/2/2015 11/3/2015 11/7/2015 11/11/2015 11/13/2015 11/14/2015 11/17/2015 11/19/2015 11/23/2015 11/26/2015 11/27/2015 11/28/2015 11/29/2015 11/30/2015 12/1/2015 12/5/2015 12/8/2015 12/9/2015 12/12/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 74.00 56.00 15.00 18.00 50.00 189.00 67.00 9.00 3.00 99.00 8.00 12.00 33.00 68.00 89.00 52.00 23.00 43.00 309.00 12.00 53.00 1.00 56.00 15.00 1.00 28.00 72.00 61.00 14.00 36.00 82.00 13.00 75.00 13.00 12/14/2015 12/15/2015 12/19/2015 12/21/2015 12/25/2015 12/27/2015 12/30/2015 $ $ $ 452.00 $ 2.00 $ 18.00 $ $ 12.00 $ 6,271.00 LEGENDS Commercial Invoices: Service Date: The date when the service has been delivered Billed: The amount of service billed to customers Cash Collection Date: The date of cash collection, blank if uncollected by the end of year Cost of Parts: Cost of parts for each service Residential Services: Date: The date when the service has been delivered Cost of Parts: Cost of parts for each service Total price of commercial services delivered during the year Total amount of cash collection during the year from commercial customers Cost of Parts Inventory used for Commercial and Residential Services $ 98,678.00 $ 87,486.00 $ 48,922.00 Residential client R 101 R 102 R 103 R 104 R 105 R 106 R 107 R 108 R 109 R 110 R 111 R 112 R 113 R 114 R 115 R 116 R 117 R 118 R 119 R 120 R 121 R 122 R 123 R 124 R 125 R 126 R 127 R 128 R 129 R 130 R 131 R 132 R 133 R 134 R 135 R 136 R 137 R 138 R 139 R 140 R 141 R 142 R 143 R 144 R 145 date paid date effective 1/1/2014 1/1/2014 1/30/2014 2/1/2014 2/26/2014 3/1/2014 3/28/2014 4/1/2014 4/26/2014 5/1/2014 5/26/2014 6/1/2014 5/26/2014 5/26/2014 6/24/2014 6/24/2014 6/24/2014 7/24/2014 7/24/2014 7/24/2014 7/24/2014 7/24/2014 8/23/2014 8/23/2014 8/23/2014 8/23/2014 9/21/2014 9/21/2014 9/21/2014 9/21/2014 10/21/2014 11/19/2014 1/30/2015 2/26/2015 3/28/2015 3/28/2015 4/26/2015 4/26/2015 5/26/2015 5/26/2015 5/26/2015 5/26/2015 6/24/2015 6/24/2015 6/24/2015 6/24/2015 6/24/2015 7/24/2015 8/23/2015 8/23/2015 8/23/2015 6/1/2014 6/1/2014 7/1/2014 7/1/2014 7/1/2014 8/1/2014 8/1/2014 8/1/2014 8/1/2014 8/1/2014 9/1/2014 9/1/2014 9/1/2014 9/1/2014 10/1/2014 10/1/2014 10/1/2014 10/1/2014 11/1/2014 12/1/2014 2/1/2015 3/1/2015 4/1/2015 4/1/2015 5/1/2015 5/1/2015 6/1/2015 6/1/2015 6/1/2015 6/1/2015 7/1/2015 7/1/2015 7/1/2015 7/1/2015 7/1/2015 8/1/2015 9/1/2015 9/1/2015 9/1/2015 $ $ $ $ $ $ fee 648.00 648.00 648.00 648.00 648.00 648.00 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 Unearned Revenue at the end of e Realized Revenue during the year Total amount of cash collection du from residential customers R 146 R 147 R 148 R 149 R 150 9/21/2015 10/21/2015 11/19/2015 11/19/2015 11/19/2015 10/1/2015 11/1/2015 12/1/2015 12/1/2015 12/1/2015 $ $ $ $ $ 648.00 648.00 648.00 648.00 648.00 Unearned Revenue at the end of each year Realized Revenue during the year Total amount of cash collection during the year from residential customers $ $ 29,790.00 $ 15,552.00 Assumptions and business details outlined by client in initial meeting : Useful life of 2014 Nissan Truck (use straight line method) Salvage value of 2014 Nissan Truck Useful life of tools purchased in 2014 for startup (use straight line method) Salvage value of tools $ $ Annual interest rate on note payable due 2020 Effective tax rate 6 years 5,000.00 3 years 500.00 9.50% 15.00% Cash Received : Beginning A/R + As specified in Appendiices B and C Checkbook details show these payments: Interest payments during 2015 Paid annual insurance policy on truck and warehouse, effective 4/1/15 Paid for gas, oil, repairs on truck Paid for Inventory purchases during year Rent and utilities for the year (all paid in year) Office supplies purchased for cash, consider all used up Estimated tax deposits paid during year Salaries and Wages for part time worker $ $ $ $ $ $ $ $ 4,000.00 6,000.00 4,000.00 70,000.00 9,600.00 200.00 400.00 9,000.00 Pending amounts and other data: Last two week of wages and payroll taxes for part time worker $ 600.00 Estimated bad debts: all open AR's at year end 2.00% IN THE BOOKS OF JAG & ELK PIPES JOURNAL ENTRIES PARTICULARS 1) Accounts Receivable - Commercial A/c Dr To Commercial Services (Being revenue recognised for commercial services provided during the year.) 2) Cash A/c Dr To Accounts Receivable - Commercial (Being cash received from Debtors.) 3) Cost of sales - residential A/c Dr Cost of sales - commercial A/c Dr To Parts Inventory (Being consumption cost of parts for providing services recognised.) 4) Unearned revenues A/c Dr Cash A/c Dr To Residential Services (Being revenue recognised for residential ervices provided during the year.) 5) Depreciation expense A/c Dr To Accumulated depreciation, trucks (Being depreciation on trucks provided.) 6) Depreciation expense A/c Dr To Accumulated depreciation, equip & tools (Being depreciation on equip & tools provided.) 7) Interest expense A/c Dr To Interest Payable (Being interest @ 9.50% recognised on notes payable.) 8) Interest payable A/c Dr Prepaid insurance A/c Dr Truck operating expenses A/c Dr Parts Inventory A/c Dr Rent and utilities expense A/c Dr Office supplies expense A/c Dr Tax Payable A/c Dr Salaries and Wage expense A/c Dr To Cash A/c (Being expenses paid in cash.) 9) Salaries and Wage expense A/c Dr To Salaries payable (Being Last two week of wages and payroll taxes for part time worker not paid.) 10) Bad debt expense A/c Dr To Allowance for bad debts - Commercial (Being provision for baddebt.) 11) Insurance expense A/c Dr To Prepaid insurance (being insurance expense realised.) 12) Tax expenses A/c Dr To Tax Payable A/c (Being tax recognised.) GRAND TOTAL DEBIT $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ CREDIT 98,678.00 $ 98,678.00 $ 87,486.00 $ 48,922.00 $ 29,790.00 $ 7,000.00 $ 2,366.67 $ 4,750.00 87,486.00 6,271.00 42,651.00 14,238.00 15,552.00 7,000.00 2,366.67 4,750.00 4,000.00 6,000.00 4,000.00 70,000.00 9,600.00 200.00 400.00 9,000.00 $ 103,200.00 $ 600.00 $ 600.00 $ $ $ 264.84 $ 264.84 $ 5,649.00 $ 5,417.32 5,649.00 5,417.32 $ 394,123.83 $ 394,123.83 IN THE BOOKS OF JAG & ELK PIPES INCOME STATEMENT FOR YEAR ENDED 12/31/2015 PARTICULARS AMOUNT AMOUNT Revenue: Residential sales $ 29,790.00 Commercial sales $ 98,678.00 Total Revenue $ 128,468.00 Less: Cost of Sales Cost of sales - residential Cost of sales - commercial Total Cost of Sales Gross Profit Less: Expenses Salaries and Wage expense Truck operating expenses Depreciation expense Rent and utilities expense Office supplies expense Bad debt expense Insurance expense Total Expenses Earnings before interest and tax Less: Interest expense Earnings before tax Less: Tax expenses Net income $ $ 6,271 42,651 $ 48,922.00 $ 79,546.00 $ $ $ $ $ $ $ 9,600 4,000 9,367 9,600 200 265 5,649 $ 38,681 $ 40,865.49 $ 4,750 $ 36,115.49 $ 5,417.32 $ 30,698.17 LIABILITIES Current Liabilities Salaries payable Interest Payable Taxes payable Notes payable TOTAL CURRENT LIABILITIES Owners' Equity Common stock Retained earnings Add: Net income TOTAL EQUITY TOTAL LIABILITIES IN THE BOOKS OF JAG & ELK PIPES BALANCE SHEET FOR THE YEAR ENDED 12/31/2015 AMOUNT AMOUNT $ $ $ $ 600.00 750.00 5,017.32 50,000.00 $ 56,367.32 $ $ $ 15,000.00 14,155.00 30,698.17 $ 59,853.17 $ 116,220.49 BOOKS OF JAG & ELK PIPES T FOR THE YEAR ENDED 12/31/2015 ASSETS Current Assets Cash Accounts Receivable - Commercial Less: Allowance for bad debts - Commercial Parts Inventory Prepaid insurance TOTAL CURRENT ASSETS Fixed Assets Plumbing equipment and tools Less: Accumulated depreciation, equip & tools Plumbing truck Less: Accumulated depreciation, trucks AMOUNT $ $ $ $ $ $ AMOUNT 21,086.00 13,242.00 337.84 12,904.16 40,180.00 1,500.00 $ 75,670.16 $ $ $ $ $ $ 7,600.00 3,549.67 4,050.33 47,000.00 10,500.00 36,500.00 TOTAL FIXED ASSETS $ 40,550.33 TOTAL ASSETS $ 116,220.49 IN THE BOOKS OF JAG & ELK PIPES CASHFLOW STATEMENT FOR THE YEAR ENDED 12/31/2015 PARTICULARS AMOUNT Cash Receipt Cash received from Account Receivables- Commercial Cash received from Residential Services Total Cash receipt Cash Payment Purchase of Inventory Interest paid Insurance paid $ 87,486.00 $ 15,552.00 $ 103,038.00 Paid for gas, oil, repairs on truck Rent and utilities expense paid Office supplies payment Tax Paid Salaries and Wages paid Total Cash payment $ 70,000.00 $ 4,000.00 $ 6,000.00 $ 4,000.00 $ 9,600.00 $ 200.00 $ 400.00 $ 9,000.00 $ 103,200.00 Net Cashflow from Operating Activities Add: Opening balance of cash & cash equivalents Closing balance of cash and cash equivalents $ (162.00) $ 21,248.00 $ 21,086.00 RATIO ANALYSIS Profitablity ratio 1) Gross profit margin = Gross profit/Total Sales = 61.92% 2) Net profit margin = Net profit/Total Sales = 23.90% 3) Return on equity = Net profit/Shareholders' equity = 51.29% 4) Total asset turnover = Net Sales/Total Assets = 1.11 5) Financial Leverage = Total Assets/Shareholders' equity = 1.94 4) As per Dupont Analysis, Return on Equity = Net profit margin * Total asset Turnover * Financial Leverage = 51.29% Liquidity ratio 1) 2) Current ratio = Current Assets/Current Liabilities = 1.34 Quick ratio = (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities = 0.60 Profitability Ratio is a measure of profitability, i.e., the capacity to make a profit, which is a way to measure a company's performance. Gross margin ratio is a profitability ratio that measures how profitable a company can sell its inventory. Net profit margin reveals the amount of profit that a business can extract from its total sales. Total Assets turnover measures how efficiently a company uses its assets to generate sales, so a higher ratio is always more favourable. Higher turnover ratios mean the company is using its assets more efficiently. Financial leverage is favourable when the uses to which debt can be put generate returns greater than the interest expense associated with the debt. Return on equity measures how efficiently a firm can use the money from shareholders to generate profits and grow the company. The profitability ratio analysis of Jag & Elk Pipes shows: Gross margin ratio Net profit margin Total Assets turnover Financial leverage Return on equity 61.92% 23.90% 1.11 1.94 51.29% This shows that the company is performing effectively and efficiently. Liquidity Ratio analyse the ability of a company to pay off both its current liabilities as they become due as well as their long-term liabilities as they become current. The quick ratio measures the liquidity of a company by showing its ability to pay off its current liabilities with quick assets without having to sell off any long-term or capital assets. The current ratio helps investors and creditors understand the liquidity of a company and how easily that company will be able to pay off its current liabilities. The profitability ratio analysis of Jag & Elk Pipes shows Quick ratio and Current ratio of 0.60 and 1.34 respectively, which shows that the company has enough liquid assets to meet its current obligations. Name: Cash Accounts Receivable - Commercial Less: Allowance for bad debts - Commercial Parts Inventory Prepaid insurance Plumbing equipment and tools Less: Accumulated depreciation, equip & tools Plumbing truck Less: Accumulated depreciation, trucks Salaries payable Interest Payable Taxes payable Notes payable Unearned revenues Common stock Retained earnings Residential sales Commercial sales Cost of sales - residential Cost of sales - commercial Salaries and Wage expense Truck operating expenses Depreciation expense Rent and utilities expense Office supplies expense Bad debt expense Insurance expense Interest expense Tax expense Total Post Closing trial Balance 1/1/2015 debit 21,248.00 2,050.00 credit 2015 transactions debit 103,038.00 98,678.00 73.00 19,102.00 1,149.00 7,600.00 70,000.00 6,000.00 1,183.00 47,000.00 3,500.00 4,000.00 400.00 50,000.00 14,238.00 15,000.00 14,155.00 98,149.00 98,149.00 - 14,238.00 6,271.00 42,651.00 9,600.00 4,000.00 9,366.67 9,600.00 200.00 264.84 5,649.00 4,750.00 5,417.32 394,123.83 - 2015 transactions credit 103,200.00 87,486.00 264.84 48,922.00 5,649.00 Adjusted trial Balance 12/31/2015 debit 21,086.00 13,242.00 credit 337.84 40,180.00 1,500.00 7,600.00 2,366.67 3,549.67 47,000.00 7,000.00 600.00 4,750.00 5,417.32 10,500.00 600.00 750.00 5,017.32 50,000.00 15,000.00 14,155.00 29,790.00 98,678.00 29,790.00 98,678.00 394,123.83 - 6,271.00 42,651.00 9,600.00 4,000.00 9,366.67 9,600.00 200.00 264.84 5,649.00 4,750.00 5,417.32 228,377.83 228,377.83 - Service date 1/1/2015 1/6/2015 1/11/2015 1/12/2015 1/16/2015 1/18/2015 1/22/2015 1/23/2015 1/26/2015 1/28/2015 1/29/2015 2/1/2015 2/8/2015 2/9/2015 2/13/2015 2/17/2015 2/20/2015 2/25/2015 2/28/2015 3/1/2015 3/4/2015 3/7/2015 3/13/2015 3/17/2015 3/23/2015 3/24/2015 3/25/2015 3/29/2015 3/31/2015 4/6/2015 4/10/2015 4/15/2015 4/18/2015 4/19/2015 4/25/2015 4/30/2015 5/1/2015 5/7/2015 5/13/2015 5/15/2015 5/19/2015 5/21/2015 5/27/2015 6/1/2015 6/5/2015 6/6/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Commercial Invoices Billed Cash Collection Date 1,656.00 1/13/2015 1,362.00 1/23/2015 886.00 2/1/2015 1,002.00 2/16/2015 549.00 2/27/2015 1,395.00 2/24/2015 294.00 2/13/2015 642.00 3/10/2015 891.00 3/16/2015 1,387.00 3/18/2015 654.00 2/20/2015 1,147.00 3/15/2015 627.00 3/6/2015 936.00 3/10/2015 743.00 2/28/2015 307.00 4/7/2015 817.00 4/10/2015 326.00 3/18/2015 1,271.00 4/1/2015 892.00 4/16/2015 1,069.00 3/23/2015 1,324.00 3/18/2015 586.00 4/11/2015 1,179.00 4/11/2015 285.00 4/3/2015 818.00 5/8/2015 1,077.00 4/25/2015 734.00 5/3/2015 726.00 5/2/2015 1,501.00 5/8/2015 1,473.00 5/8/2015 1,242.00 5/26/2015 1,509.00 5/1/2015 983.00 5/16/2015 1,123.00 308.00 5/12/2015 1,189.00 5/18/2015 1,159.00 5/22/2015 727.00 5/24/2015 928.00 6/3/2015 229.00 6/17/2015 1,305.00 6/19/2015 1,037.00 6/18/2015 749.00 6/11/2015 334.00 6/16/2015 1,209.00 7/10/2015 cost of parts $ 910.00 $ 374.00 $ 365.00 $ 200.00 $ 296.00 $ 502.00 $ 176.00 $ 342.00 $ 267.00 $ 416.00 $ 392.00 $ 717.00 $ 564.00 $ 582.00 $ 204.00 $ 147.00 $ 408.00 $ 196.00 $ 635.00 $ 584.00 $ 583.00 $ 361.00 $ 195.00 $ 589.00 $ 85.00 $ 334.00 $ 359.00 $ 293.00 $ 356.00 $ 546.00 $ 642.00 $ 496.00 $ 528.00 $ 536.00 $ 411.00 $ 100.00 $ 396.00 $ 478.00 $ 303.00 $ 334.00 $ 75.00 $ 427.00 $ 377.00 $ 449.00 $ 148.00 $ 332.00 Residential Services date cost of parts 1/4/2015 $ 223.00 1/6/2015 $ 1/10/2015 $ 12.00 1/11/2015 $ 40.00 1/12/2015 $ 1/16/2015 $ 105.00 1/19/2015 $ 371.00 1/21/2015 $ 28.00 1/25/2015 $ 1/29/2015 $ 6.00 1/31/2015 $ 327.00 2/1/2015 $ 2/5/2015 $ 2/7/2015 $ 28.00 2/9/2015 $ 169.00 2/13/2015 $ 2/16/2015 $ 2/18/2015 $ 25.00 2/19/2015 $ 139.00 2/20/2015 $ 7.00 2/24/2015 $ 2/25/2015 $ 2/27/2015 $ 2/28/2015 $ 72.00 3/2/2015 $ 9.00 3/5/2015 $ 150.00 3/6/2015 $ 3/9/2015 $ 93.00 3/11/2015 $ 33.00 3/12/2015 $ 3/15/2015 $ 40.00 3/16/2015 $ 157.00 3/20/2015 $ 3/23/2015 $ 41.00 3/25/2015 $ 44.00 3/28/2015 $ 3/30/2015 $ 8.00 4/3/2015 $ 37.00 4/6/2015 $ 8.00 4/10/2015 $ 4/11/2015 $ 53.00 4/14/2015 $ 73.00 4/16/2015 $ 4/18/2015 $ 4/21/2015 $ 47.00 4/23/2015 $ 62.00 6/10/2015 6/12/2015 6/14/2015 6/17/2015 6/20/2015 6/21/2015 6/25/2015 6/27/2015 6/28/2015 6/30/2015 7/4/2015 7/10/2015 7/11/2015 7/16/2015 7/21/2015 7/24/2015 7/26/2015 7/31/2015 8/1/2015 8/2/2015 8/5/2015 8/9/2015 8/14/2015 8/19/2015 8/21/2015 8/26/2015 8/28/2015 9/1/2015 9/3/2015 9/8/2015 9/9/2015 9/10/2015 9/14/2015 9/15/2015 9/16/2015 9/20/2015 9/25/2015 9/26/2015 9/30/2015 10/1/2015 10/7/2015 10/10/2015 10/15/2015 10/19/2015 10/21/2015 10/24/2015 10/29/2015 11/2/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1,429.00 309.00 1,186.00 1,488.00 464.00 711.00 1,282.00 1,059.00 935.00 1,011.00 1,494.00 178.00 741.00 541.00 1,207.00 1,751.00 1,482.00 389.00 1,449.00 260.00 843.00 426.00 867.00 1,428.00 209.00 1,018.00 1,428.00 1,323.00 1,410.00 358.00 529.00 785.00 701.00 1,588.00 400.00 872.00 387.00 580.00 1,692.00 828.00 430.00 729.00 840.00 792.00 391.00 1,434.00 423.00 1,235.00 6/21/2015 7/4/2015 7/4/2015 7/5/2015 7/27/2015 7/3/2015 7/30/2015 7/15/2015 7/30/2015 8/19/2015 7/31/2015 7/25/2015 7/29/2015 8/17/2015 8/18/2015 8/9/2015 8/5/2015 8/28/2015 9/6/2015 9/8/2015 9/6/2015 8/26/2015 8/31/2015 8/30/2015 9/11/2015 9/11/2015 10/9/2015 10/12/2015 9/19/2015 10/13/2015 9/19/2015 10/20/2015 10/6/2015 10/21/2015 10/4/2015 10/7/2015 10/28/2015 10/10/2015 10/26/2015 11/4/2015 11/21/2015 10/27/2015 11/10/2015 11/25/2015 11/30/2015 12/3/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 669.00 123.00 783.00 446.00 185.00 426.00 615.00 577.00 612.00 449.00 597.00 96.00 494.00 295.00 592.00 963.00 444.00 212.00 782.00 156.00 562.00 136.00 476.00 779.00 91.00 333.00 467.00 635.00 307.00 148.00 396.00 428.00 153.00 693.00 133.00 465.00 190.00 208.00 465.00 264.00 215.00 318.00 504.00 518.00 215.00 473.00 259.00 617.00 4/25/2015 4/27/2015 4/28/2015 4/29/2015 5/2/2015 5/3/2015 5/6/2015 5/8/2015 5/10/2015 5/12/2015 5/14/2015 5/15/2015 5/17/2015 5/20/2015 5/22/2015 5/24/2015 5/27/2015 5/30/2015 6/3/2015 6/6/2015 6/8/2015 6/11/2015 6/14/2015 6/16/2015 6/19/2015 6/21/2015 6/24/2015 6/26/2015 6/29/2015 7/3/2015 7/5/2015 7/9/2015 7/11/2015 7/12/2015 7/15/2015 7/17/2015 7/18/2015 7/22/2015 7/23/2015 7/24/2015 7/26/2015 7/30/2015 7/31/2015 8/2/2015 8/4/2015 8/8/2015 8/9/2015 8/13/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 124.00 96.00 108.00 7.00 27.00 39.00 74.00 31.00 24.00 9.00 111.00 49.00 17.00 66.00 160.00 61.00 82.00 3.00 24.00 20.00 273.00 27.00 26.00 5.00 11.00 1.00 102.00 20.00 6.00 20.00 8.00 11/7/2015 11/9/2015 11/15/2015 11/16/2015 11/22/2015 11/26/2015 12/1/2015 12/2/2015 12/6/2015 12/12/2015 12/13/2015 12/15/2015 12/20/2015 12/26/2015 12/29/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 996.00 777.00 180.00 993.00 219.00 849.00 412.00 356.00 1,634.00 316.00 1,177.00 1,193.00 497.00 1,543.00 1,637.00 98,678.00 $ 12/18/2015 12/26/2016 12/15/2015 12/22/2015 12/17/2015 12/19/2015 12/28/2015 87,486.00 $ 358.00 $ 427.00 $ 132.00 $ 361.00 $ 65.00 $ 254.00 $ 225.00 $ 71.00 $ 681.00 $ 105.00 $ 317.00 $ 477.00 $ 112.00 $ 577.00 $ 515.00 $ 42,651.00 8/16/2015 8/19/2015 8/20/2015 8/23/2015 8/24/2015 8/25/2015 8/28/2015 9/1/2015 9/3/2015 9/7/2015 9/11/2015 9/15/2015 9/19/2015 9/21/2015 9/24/2015 9/28/2015 10/2/2015 10/3/2015 10/4/2015 10/7/2015 10/11/2015 10/14/2015 10/16/2015 10/18/2015 10/21/2015 10/22/2015 10/23/2015 10/27/2015 10/29/2015 11/2/2015 11/3/2015 11/7/2015 11/11/2015 11/13/2015 11/14/2015 11/17/2015 11/19/2015 11/23/2015 11/26/2015 11/27/2015 11/28/2015 11/29/2015 11/30/2015 12/1/2015 12/5/2015 12/8/2015 12/9/2015 12/12/2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 74.00 56.00 15.00 18.00 50.00 189.00 67.00 9.00 3.00 99.00 8.00 12.00 33.00 68.00 89.00 52.00 23.00 43.00 309.00 12.00 53.00 1.00 56.00 15.00 1.00 28.00 72.00 61.00 14.00 36.00 82.00 13.00 75.00 13.00 12/14/2015 12/15/2015 12/19/2015 12/21/2015 12/25/2015 12/27/2015 12/30/2015 $ $ $ 452.00 $ 2.00 $ 18.00 $ $ 12.00 $ 6,271.00 LEGENDS Commercial Invoices: Service Date: The date when the service has been delivered Billed: The amount of service billed to customers Cash Collection Date: The date of cash collection, blank if uncollected by the end of year Cost of Parts: Cost of parts for each service Residential Services: Date: The date when the service has been delivered Cost of Parts: Cost of parts for each service Total price of commercial services delivered during the year Total amount of cash collection during the year from commercial customers Cost of Parts Inventory used for Commercial and Residential Services $ 98,678.00 $ 87,486.00 $ 48,922.00 Residential client R 101 R 102 R 103 R 104 R 105 R 106 R 107 R 108 R 109 R 110 R 111 R 112 R 113 R 114 R 115 R 116 R 117 R 118 R 119 R 120 R 121 R 122 R 123 R 124 R 125 R 126 R 127 R 128 R 129 R 130 R 131 R 132 R 133 R 134 R 135 R 136 R 137 R 138 R 139 R 140 R 141 R 142 R 143 R 144 R 145 date paid date effective 1/1/2014 1/1/2014 1/30/2014 2/1/2014 2/26/2014 3/1/2014 3/28/2014 4/1/2014 4/26/2014 5/1/2014 5/26/2014 6/1/2014 5/26/2014 5/26/2014 6/24/2014 6/24/2014 6/24/2014 7/24/2014 7/24/2014 7/24/2014 7/24/2014 7/24/2014 8/23/2014 8/23/2014 8/23/2014 8/23/2014 9/21/2014 9/21/2014 9/21/2014 9/21/2014 10/21/2014 11/19/2014 1/30/2015 2/26/2015 3/28/2015 3/28/2015 4/26/2015 4/26/2015 5/26/2015 5/26/2015 5/26/2015 5/26/2015 6/24/2015 6/24/2015 6/24/2015 6/24/2015 6/24/2015 7/24/2015 8/23/2015 8/23/2015 8/23/2015 6/1/2014 6/1/2014 7/1/2014 7/1/2014 7/1/2014 8/1/2014 8/1/2014 8/1/2014 8/1/2014 8/1/2014 9/1/2014 9/1/2014 9/1/2014 9/1/2014 10/1/2014 10/1/2014 10/1/2014 10/1/2014 11/1/2014 12/1/2014 2/1/2015 3/1/2015 4/1/2015 4/1/2015 5/1/2015 5/1/2015 6/1/2015 6/1/2015 6/1/2015 6/1/2015 7/1/2015 7/1/2015 7/1/2015 7/1/2015 7/1/2015 8/1/2015 9/1/2015 9/1/2015 9/1/2015 $ $ $ $ $ $ fee 648.00 648.00 648.00 648.00 648.00 648.00 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 648.00 Unearned Revenue at the end of e Realized Revenue during the year Total amount of cash collection du from residential customers R 146 R 147 R 148 R 149 R 150 9/21/2015 10/21/2015 11/19/2015 11/19/2015 11/19/2015 10/1/2015 11/1/2015 12/1/2015 12/1/2015 12/1/2015 $ $ $ $ $ 648.00 648.00 648.00 648.00 648.00 Unearned Revenue at the end of each year Realized Revenue during the year Total amount of cash collection during the year from residential customers $ $ 29,790.00 $ 15,552.00 Assumptions and business details outlined by client in initial meeting : Useful life of 2014 Nissan Truck (use straight line method) Salvage value of 2014 Nissan Truck Useful life of tools purchased in 2014 for startup (use straight line method) Salvage value of tools $ $ Annual interest rate on note payable due 2020 Effective tax rate 6 years 5,000.00 3 years 500.00 9.50% 15.00% Cash Received : Beginning A/R + As specified in Appendiices B and C Checkbook details show these payments: Interest payments during 2015 Paid annual insurance policy on truck and warehouse, effective 4/1/15 Paid for gas, oil, repairs on truck Paid for Inventory purchases during year Rent and utilities for the year (all paid in year) Office supplies purchased for cash, consider all used up Estimated tax deposits paid during year Salaries and Wages for part time worker $ $ $ $ $ $ $ $ 4,000.00 6,000.00 4,000.00 70,000.00 9,600.00 200.00 400.00 9,000.00 Pending amounts and other data: Last two week of wages and payroll taxes for part time worker $ 600.00 Estimated bad debts: all open AR's at year end 2.00% IN THE BOOKS OF JAG & ELK PIPES JOURNAL ENTRIES PARTICULARS 1) Accounts Receivable - Commercial A/c Dr To Commercial Services (Being revenue recognised for commercial services provided during the year.) 2) Cash A/c Dr To Accounts Receivable - Commercial (Being cash received from Debtors.) 3) Cost of sales - residential A/c Dr Cost of sales - commercial A/c Dr To Parts Inventory (Being consumption cost of parts for providing services recognised.) 4) Unearned revenues A/c Dr Cash A/c Dr To Residential Services (Being revenue recognised for residential ervices provided during the year.) 5) Depreciation expense A/c Dr To Accumulated depreciation, trucks (Being depreciation on trucks provided.) 6) Depreciation expense A/c Dr To Accumulated depreciation, equip & tools (Being depreciation on equip & tools provided.) 7) Interest expense A/c Dr To Interest Payable (Being interest @ 9.50% recognised on notes payable.) 8) Interest payable A/c Dr Prepaid insurance A/c Dr Truck operating expenses A/c Dr Parts Inventory A/c Dr Rent and utilities expense A/c Dr Office supplies expense A/c Dr Tax Payable A/c Dr Salaries and Wage expense A/c Dr To Cash A/c (Being expenses paid in cash.) 9) Salaries and Wage expense A/c Dr To Salaries payable (Being Last two week of wages and payroll taxes for part time worker not paid.) 10) Bad debt expense A/c Dr To Allowance for bad debts - Commercial (Being provision for baddebt.) 11) Insurance expense A/c Dr To Prepaid insurance (being insurance expense realised.) 12) Tax expenses A/c Dr To Tax Payable A/c (Being tax recognised.) GRAND TOTAL DEBIT $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ CREDIT 98,678.00 $ 98,678.00 $ 87,486.00 $ 48,922.00 $ 29,790.00 $ 7,000.00 $ 2,366.67 $ 4,750.00 87,486.00 6,271.00 42,651.00 14,238.00 15,552.00 7,000.00 2,366.67 4,750.00 4,000.00 6,000.00 4,000.00 70,000.00 9,600.00 200.00 400.00 9,000.00 $ 103,200.00 $ 600.00 $ 600.00 $ $ $ 264.84 $ 264.84 $ 5,649.00 $ 5,417.32 5,649.00 5,417.32 $ 394,123.83 $ 394,123.83 IN THE BOOKS OF JAG & ELK PIPES INCOME STATEMENT FOR YEAR ENDED 12/31/2015 PARTICULARS AMOUNT AMOUNT Revenue: Residential sales $ 29,790.00 Commercial sales $ 98,678.00 Total Revenue $ 128,468.00 Less: Cost of Sales Cost of sales - residential Cost of sales - commercial Total Cost of Sales Gross Profit Less: Expenses Salaries and Wage expense Truck operating expenses Depreciation expense Rent and utilities expense Office supplies expense Bad debt expense Insurance expense Total Expenses Earnings before interest and tax Less: Interest expense Earnings before tax Less: Tax expenses Net income $ $ 6,271 42,651 $ 48,922.00 $ 79,546.00 $ $ $ $ $ $ $ 9,600 4,000 9,367 9,600 200 265 5,649 $ 38,681 $ 40,865.49 $ 4,750 $ 36,115.49 $ 5,417.32 $ 30,698.17 LIABILITIES Current Liabilities Salaries payable Interest Payable Taxes payable Notes payable TOTAL CURRENT LIABILITIES Owners' Equity Common stock Retained earnings Add: Net income TOTAL EQUITY TOTAL LIABILITIES IN THE BOOKS OF JAG & ELK PIPES BALANCE SHEET FOR THE YEAR ENDED 12/31/2015 AMOUNT AMOUNT $ $ $ $ 600.00 750.00 5,017.32 50,000.00 $ 56,367.32 $ $ $ 15,000.00 14,155.00 30,698.17 $ 59,853.17 $ 116,220.49 BOOKS OF JAG & ELK PIPES T FOR THE YEAR ENDED 12/31/2015 ASSETS Current Assets Cash Accounts Receivable - Commercial Less: Allowance for bad debts - Commercial Parts Inventory Prepaid insurance TOTAL CURRENT ASSETS Fixed Assets Plumbing equipment and tools Less: Accumulated depreciation, equip & tools Plumbing truck Less: Accumulated depreciation, trucks AMOUNT $ $ $ $ $ $ AMOUNT 21,086.00 13,242.00 337.84 12,904.16 40,180.00 1,500.00 $ 75,670.16 $ $ $ $ $ $ 7,600.00 3,549.67 4,050.33 47,000.00 10,500.00 36,500.00 TOTAL FIXED ASSETS $ 40,550.33 TOTAL ASSETS $ 116,220.49 IN THE BOOKS OF JAG & ELK PIPES CASHFLOW STATEMENT FOR THE YEAR ENDED 12/31/2015 PARTICULARS AMOUNT Cash Receipt Cash received from Account Receivables- Commercial Cash received from Residential Services Total Cash receipt Cash Payment Purchase of Inventory Interest paid Insurance paid $ 87,486.00 $ 15,552.00 $ 103,038.00 Paid for gas, oil, repairs on truck Rent and utilities expense paid Office supplies payment Tax Paid Salaries and Wages paid Total Cash payment $ 70,000.00 $ 4,000.00 $ 6,000.00 $ 4,000.00 $ 9,600.00 $ 200.00 $ 400.00 $ 9,000.00 $ 103,200.00 Net Cashflow from Operating Activities Add: Opening balance of cash & cash equivalents Closing balance of cash and cash equivalents $ (162.00) $ 21,248.00 $ 21,086.00 RATIO ANALYSIS Profitablity ratio 1) Gross profit margin = Gross profit/Total Sales = 61.92% 2) Net profit margin = Net profit/Total Sales = 23.90% 3) Return on equity = Net profit/Shareholders' equity = 51.29% 4) Total asset turnover = Net Sales/Total Assets = 1.11 5) Financial Leverage = Total Assets/Shareholders' equity = 1.94 4) As per Dupont Analysis, Return on Equity = Net profit margin * Total asset Turnover * Financial Leverage = 51.29% Liquidity ratio 1) 2) Current ratio = Current Assets/Current Liabilities = 1.34 Quick ratio = (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities = 0.60 Profitability Ratio is a measure of profitability, i.e., the capacity to make a profit, which is a way to measure a company's performance. Gross margin ratio is a profitability ratio that measures how profitable a company can sell its inventory. Net profit margin reveals the amount of profit that a business can extract from its total sales. Total Assets turnover measures how efficiently a company uses its assets to generate sales, so a higher ratio is always more favourable. Higher turnover ratios mean the company is using its assets more efficiently. Financial leverage is favourable when the uses to which debt can be put generate returns greater than the interest expense associated with the debt. Return on equity measures how efficiently a firm can use the money from shareholders to generate profits and grow the company. The profitability ratio analysis of Jag & Elk Pipes shows: Gross margin ratio Net profit margin Total Assets turnover Financial leverage Return on equity 61.92% 23.90% 1.11 1.94 51.29% This shows that the company is performing effectively and efficiently. Liquidity Ratio analyse the ability of a company to pay off both its current liabilities as they become due as well as their long-term liabilities as they become current. The quick ratio measures the liquidity of a company by showing its ability to pay off its current liabilities with quick assets without having to sell off any long-term or capital assets. The current ratio helps investors and creditors understand the liquidity of a company and how easily that company will be able to pay off its current liabilities. The profitability ratio analysis of Jag & Elk Pipes shows Quick ratio and Current ratio of 0.60 and 1.34 respectively, which shows that the company has enough liquid assets to meet its current obligations