- Investment opportunity Your Aunt is considering buying one of two companies. He provides you with the unadjusted trial balance for one company and the adjusted trial balance for the second company. He asks if you learned anything in your accounting classes that helps to compare the operations and results of one business vs. another business. You think about it for a second and tell your aunt that yes that is what ratios are for! (Inside you are doing your happy dance since you are impressing your aunt!) Your aunt wants to know which business he should buy. He only has enough money to invest in one company. One thing he mentions he is impressed that both companies have payment terms for their customers to pay their bills in 45 days. (n/45) You decide to create the journal entries required to update the unadjusted trial balance. You remember you used t-accounts in your BUS 285 class to do this. You also remember that you are to show all calculations related to the journal entries. You think more about ratios and decide to brush up on the definitions of the three major categories of ratios. In your own words (for the individual WORD submission), you write out these definitions. You decide to calculate the current ratio, working capital, debt to total assets, profit margin, and a new one you found -- accounts receivable turnover and accounts receivable turnover in days. You remember from your BUS 285 class there is a similar ratio like this for inventory. Your Aunt doesnt understand the value of ratios so you decide you should send him a memo explaining in your own words what ratios do, how they are used, and why each of these ratios you calculated are important to an investor. (for the group WORD submission) When you are comparing the two investment opportunities, you write out the formulas, show your full calculations and the meaning of what the specific ratios you calculated mean to your aunts purchase decision. (group submission in the provided EXCEL document). You know your aunt will ask for your opinion on which company you recommend he buy. You also know that he will want to know WHY you are making this specific recommendation to him and if there is anything else he should know about the company you are recommending. (for the group WORD submission) You get to work on this important analysis for your aunt. Levene Ltd. Trial balance For the period ending January 30, 2022 Debit Credit Cash $162,000 Accounts receivable 258,000 Prepaid insurance 36,000 Equipment 1,562,400 Unearned revenue 48,000 Accounts payable 114,000 Bank loan payable 474,000 Common shares 25,000 Retained earnings 519,000 Dividends declared 55,000 Service revenue 1,417,400 Supplies expense 23,000 Salaries expense 368,000 Utilities expense 9,000 Interest expense 21,000 Insurance expense 70,000 Income tax expense 33000 Total $2,597,400 $2,597,400 The Companys bookkeeper had failed to record adjusting entries for the following: 1) The companys employees had earned salaries of $21,600 during the last six working days in January. These will be paid in the first week of February. 2) Interest on the bank loan was not accrued for the month. The loan bears interest at 6%. The portion of the bank loan to be paid in the next year is $50000. 3) No depreciation was recorded for the equipment for the year. The equipment is expected to have an estimated six year useful life. 4) The company provided the services related to $20,000 of the unearned revenue in January. Hill Inc. Adjusted trial Balance For the period ending January 30, 2022 Debit Credit Cash $162,000 Accounts receivable 355,000 Prepaid insurance 36,000 Prepaid rent expense 15,000 Prepaid insurance expense 5,000 Supplies on hand 3,500 Equipment 1,842,500 Accumulated depreciation equipment $571,000 Unearned revenue 68,000 Accounts payable 114,000 Salaries payable 25,000 Income tax payable 45,000 Property taxes payable 12,500 Bank loan payable current 85,000 Bank loan payable non current 413,200 Common shares 25,000 Retained earnings 374,000 Dividends declared 55,000 Service revenue 1,642,500 Depreciation expense 273,000 Salaries expense 448,000 Utilities expense 9,000 Interest expense 45,200 Supplies expense 23,000 Insurance expense 70,000 Income tax expense 33,000 Total $3,375,200 $3,375,200