`

PROBLEM 1

Required:

Part 1: Complete a Balance Sheet and analyze using vertical and horizontal analysis. Then

answer a few questions regarding the absolute (dollar) changes.

Part 2: Complete a Summary Operating Statement (Income Statement) and analyze using

vertical and horizontal analysis.

Part 3: Complete a Statement of Cash Flows.

Part 1:

Below are the balance sheet accounts and balances for The Cougar Hotel for the years 20X7

and 20X8, please complete the following:

1. Organize the information into the correct Balance Sheet Format. Proper format

includes:

a. Headings

b. Dates

c. Subtotals/Totals

d. Vertical Analysis

e. Horizontal Analysis

20X7 20X8

Accounts Payable 100,000 500,000

Accounts Receivable 500,000 100,000

Accumulated Depreciation (7,000,000) (12,000,000)

Building 20,000,000 25,000,000

Cash 600,000 400,000

Common Stock 20,000,000 25,000,000

Current Portion of Mortgage 1,250,000 1,250,000

Equipment 10,000,000 12,000,000

Goodwill 1,700,000 1,700,000

Inventory 1,000,000 200,000

Land 10,000,000 10,000,000

Long-term Bond Payable 2,000,000 2,000,000

Marketable Securities 600,000 500,000

Mortgage 10,000,000 5,800,000

Prepaids 300,000 300,000

Restricted Cash 200,000 200,000

Retained Earnings 4,250,000 3,700,000

Taxes Payable 300,000 150,000

2. Using the completed Balance Sheet and using the additional information below, answer the following questions regarding the Balance Sheet. To receive full credit, you must show all your work:

a. What amount of equipment was purchased during 20X8?

b. Show the calculations for any gains or losses on the sale of assets in 20X8?

c. What amount of the total mortgage payable was paid in 20X8?

d. What is the amount of depreciation expense for 20X8?

Additional Information

Any purchases made for Investments or Property and Equipment were in cash.

Net Loss for 20X8 was ($550,000).

The following were sold in 20X8:

Cash

Received

BOOK VALUE ACCUMULATED

DEPRECIATION

Equipment 1,000,000 500,000 700,000

Marketable Securities 100,000 N/A 50,000

Assume all current liabilities are paid on a timely basis.

PART 2:

The General Manager of The Cougar Hotel would like you to take the balances for 20X7 and

20X8 and;

1. Prepare a comparative Summary Operating Statement that is in compliance with the USALI 11th Edition (i.e. make sure it is in the correct format, use the template found in the Income Statement module or in the Other Course Resources folder).