Question $1$

The following Statement of Financial Position accounts are reported for Bees Knees Ltd at December $31,$

$20$X$1.$ This company$$s business model is to create novelty products from honey and resell them at a

profit through small retailers and farm shops. All balances are in Canadian dollars $($$$)$

Account Balance $($DR$)$ Balance $($CR$)$

Petty cash $400$

Cash in bank $26,600$

A$/$R $23,000$

Inventory $($products for sale$)60,000$

Honey and supplies inventory $45,000$

Prepaid rent $15,000$

Equipment $55,000$

Accumulated depreciation $$ Equip. $20,000$

Debt $100,000$

Common shares $50,000$

Retained earnings $55,000$

January $1$: BK ordered and received $$10,000$ of honey, paid for in cash

January $5$: BK purchases canning supplies for $$1,200$ on account

January $7$: BK reimburses an employee for fuel costs paid of $$65$ and office expenses of $$120($total

amount reimbursed $=$ $$185$ from petty cash$)$

January $12$: BK purchases a canning machine for $$12,000$ and pays with cheque #$55$

January $13$: BK sells $$25,000$ of product inventory for $$40,000$ on account

January $14$: BK raises financing by issuing shares in the amount of $$25,000$ received by cheque

January $15$: BK collects employee timecards. Total amount owing to employees is $$35,000$

January $16$: BK collects $$5,000$ from customers for payment on account

January $19$: BK pays employees by direct deposit for amounts owing $($see Jan $15)$

January $22$: BK receives an invoice for billboard advertising in the amount of $$700$

January $24$: BK pays the invoice for billboard advertising $($see Jan $22)$

January $28$: BK receives a custom product order and a deposit from the customer for $$15,000$

January $30$: BK pays $$2,000$ on debt owing $($$$1,400$ for principal and $$600$ for interest$)$

January $30$: BK $$tops up$$ petty cash to $$400$ by withdrawing cash from the bank account

January $31$: BK has used up one month$$s rent. Two months rent now remain.

BUS$285$ Lab $2$ January $26$

Required:

$1.$ Post the above balances to T$-$accounts $($see T$-$account template on URCourses$)$

$2.$ Post the transactions to your T$-$accounts

$3.$ Total your T$-$accounts and create a Statement of Financial Position from your ending balances.

BK has yet to determine the current portion of long$-$term debt, so classify the entire amount as

non$-$current.

$4.$ Comment on Bees Knees$$ liquidity and solvency using ratio analysis.