In the accompanying Excel file, you will find a tab with various transactions. The assignment is to complete in the blank template of the excel file the following:

Journalize each transaction

Post to the General Ledger

In the Financial Statements tab, create a Balance Sheet and Income Statement that automatically populate

o Create a Statement of Cash Flows as well. This one does not have to automatically populate.

Answer the following questions:

After the end of the 1st Quarter, the five friends approach a sixth friend with an opportunity to join them in thebusiness. She would simply purchase a pro-rata share from each of the five initial investors making them all equal partners. Unfortunately, she does not know much about accounting and has asked you answer the following questions.

Your answers are to someone that does not understand accounting at all so please keep that in mind when answering. If you use any accounting terms you must explain it in laymans terms as well. Answer questions from a conceptual perspective, I dont need specific numbers unless you are using some as examples or pointing out a specific line item.

In what statement do I find the items the company possesses and how much of it is owed to creditors?Explain this statement in Laymens terms and how does it relate to evaluating a firms value.

What statement shows me the companys ability to produce incremental value during a period of time for its shareholders? Explain this statement in Laymens terms and how does it relate to evaluating a firms value.

Can we calculate the market value of a company directly from these statements? Why or why not?

Assuming Quarter 1 profit performance can be replicated for the remaining 3 Quarters, what would be the return the company provided to the owners on their specific investment?

Assuming this return could be replicated for the foreseeable future and the new potential investor requires a return on her investment of 20%, would she accept this investment?

Why is there a difference between the cash the company generated from operations and their profits for the period? How does this information complement each other?

Date	Transaction
1-Jan-20	Five friends decide to start a computer sales and repair store; start the company by issuing 100,000 shares with a par value of $1 sold to each friend for $3 each.
1-Jan-20	Realizing they are going to need more cash to run the business, the company obtained a long term bank loan for $200,000. Payments will not have to be made unitl the following year but interest will accrue at 2%
1-Jan-20	The new owners already had various transactions they had agreed on for the first day of operations; they are as follows:
	Equipment to diagnose customer computers was purchased for $122,000 cash. The equipment has a 10 year life and a $2,000 residual value
	Inventory to be sold to customers was purchased on credit for $50,000
	Supplies to be used for operations was purchased for cash of $10,000
	In order to get a good discount Store Rent was paid in full for the year; $24,000 cash was paid
	A friend of the owners who had another company paid them $6,000 cash upfront for a full year of monthly computer service
Companies typically record adjusting entries at the end of each month. In order to simplify this execise adjusting entries will be recorded on a quarterly basis.
Below please find the regular transactions for the first quarter. Don't forget to book the adjusting entries as well.
Quarter 1	Service revenue for $30,000 was provided; $20,000 was collected in cash and the remainder is still owed by the custormers
	Services for the $6,000 advance was also done for the quarter. Book this as an adjusting entry separately.
	Inventory at a cost of $10,000 was sold for $15,000 cash
	Employees earned $6,000 in wages for the quarter; paychecks for the quarter totalled $5,500 (i.e. the other $500 will be in next quarters first paycheck)
	$10,000 related to the inventory purchased on credit was paid to the supplier
	Adjusting entries:
	Accrue Interest, Depreciation, Prepaid Rent, Unearned Revenues, Supplies audit shows $8,000 remain.