Question #1 - (20 marks)

Based on the Chart of Accounts in Appendix A for JJ SPORTS Inc. create the Income Statement, Balance Sheet and Statement of Changes of Owners Equity for both 2019 & 2020.

Use the templates provided for how they should look.

oEnsure you include all the accounts (do not just put totals). Example, there should be no Net Fixed Assets etc.

Company's tax rate is 35%.

Retained Earnings are beginning balances, as of January 1^st each year. You must calculate their ending balances for the Statement of Changes of Owners Equity.

Question #2 - (10 marks - 400 -600 words)

Based on the financial statements you created:

1.What could you conclude about JJ SPORTS Inc.'s financial performance over the past 2 years?

2.What stands out to you?

3.Do you have any concerns?

Do not do any detailed analysis.Only use the information from your financial statements.

Appendix A

Chart of Accounts

JJ SPORTS Inc.

31-Dec-19

31-Dec-20

Balance

Balance

Account

Debit

Credit

Debit

Credit

Cash

$902,500

$1,657,125.0

Accounts Receivable

$387,500

$597,500

Office Supplies

$87,500

$127,500

Manufacturing Equipment

$1,500,000

$1,500,000

Inventory

$430,000

$800,000

Acc. Depreciation Equipment

$600,000

$750,000

Accounts Payable

$212,500

$425,000

Interest Payable

$37,500

$67,500

Income Taxes Payable

$235,375

$321,125

Long-term Notes Payable

$625,000

$875,000

Common Stock

$1,000,000

$1,250,000

Retained Earnings @ Jan 1st

$260,000

$597,125

Owners Withdrawals

$50,000

Dividends

$100,000

$150,000

Equipment Sales

$7,901,250

$12,718,750

Office Salaries

$900,000

$1,292,500

Insurance

$20,000

$27,500

IT Network Expense

$62,500

$93,750

Utilities

$120,000

$192,500

Sales Salaries & Commissions

$260,000

$550,000

Advertising

$263,750

$362,500

Interest Expense

$37,500

$52,500

Maintenance & Repair Expense

$121,250

$206,250

Rent

$240,000

$330,000

Income Tax Expense

$235,375

$321,125

Depreciation Expense Equipment

$150,000

$150,000

Cost of Goods Sold

$5,053,750

$8,543,750

Total

$10,871,625

$10,871,625

$17,004,500

$17,004,500

Appendix B - Financial Statements Basic Templates

Below are the titles you should include in your financial statements.

You will need to add many rows to include all the right accounts under each section.

Ensure EVERY account is listed somewhere on these financial statements. DO NOT just put the totals.

JJ SPORTS Inc.

Income Statement

..........

.....................

...................

Revenues:

**list of accounts here**

Gross Profit

Operating Expenses:

Selling Expenses

**list of accounts here**

Total Selling Expenses

General & Admin Expenses

***list of accounts here***

Total G & A Expenses

Total Operating Expenses

EBIT

**account here**

Earnings before Tax

**account here**

Earnings After Tax

JJ SPORTS Inc.

Statement of Changes in Owner's Equity

Common Stock

Retained Earnings

**list of accounts here**

Retained Earnings

Owner's Equity

JJ SPORTSInc.

Balance Sheet

.................

...................

..................

Assets

Current Assets:

**list of accounts here**

Total Current Assets

Property, plant and equipment:

**list of accounts here**

Total property, plant and equipment

Total Assets

Liabilities

Current liabilities

**list of accounts here**

Total Current Liabilities

Long Term Liabilities

**list of accounts here**

Total Long Term Liabilities

Total Liabilities

Shareholders Equity

JJ SPORTS Equity

Total Owner's Equity

Total Liabilities & Equity