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DM Yard services Balance Sheet As of year end of December 31, 2020 ASSETS Current Assets Cash 3,213.02 Accounts Receivable 3,869.25 DM Yard Services Statement of Owner's Equity Year Ending December 31, 2020 Inventory Asset Office Supplies Prepaid Insurance Total Current Assets 1,917.77 69.00 705.00 9,774.04 DM, Capital January 1, 2020 Owner Contribution Net Loss for the year 58,200.00 (15,950.32) 42,249.68 (15,613.52) 26,636.16 DM, Withdrawal DM, Capital December 31, 2020 Property and Equipment: Lawn And Landscaping Equipment Leasehold Improvements Office Equipment Truck Truck With Snow Plow Less: Accumulated Depreciation Total Property and Equipment 4,500.00 850.00 787.50 18,200.00 20,000.00 (4,249.00) 40,088.50 Other Asstes Security Deposits Total Other Assets 1,000.00 1,000.00 TOTAL ASSETS 50,862.54 LIABILITIES AND SHAREHOLDER'S EQUITY Current Liabilities Accounts Payable Credit Cards cu care Payroll Tax Liabilities Fayl Interest Payable Note Payable - Current Portion Sales Tax Payable Wages Payable Total Current Liabilities 425.00 617.02 3,564.20 71.23 3.550.23 365.60 258.00 8,851.28 Long term Liabilities Notes Payable Total Long term Liabilities 15,375.10 15,375.10 OWNER'S EQUITY DM Capital 26,636.16 Total Owner's Equity 26,636.16 Total Liabilities and Owner's Equity 50,862.54 Balance Sheet review: A. Calculate current ratio. a. Can DM Yard Services meet its current obligation? b. How would they (DM Yard Services) address an unexpected major cost? C. Comment on DM Yard Services short-term versus long-term solvency? B. Calculate accounts receivable turnover ratio, using year-end A/R balance only as denominator. a. Comment on result; is this a good position? C. Calculate inventory turnover ratio, adding field wages to CGS in numerator and using year-end inventory for denominator. a. Comment on result taking into account type of inventory items. D. Calculate Fixed Asset Turnover Ratio. a. What does this ratio represent? b. Is the investment in equipment profitable for DM Yard Services? Yes or No, then explain your answer. E. Calculate the debt to equity ratio. Is the company financed primarily with debt or equity? a. Is this a good position? b. Did DM Yard Services handle debt efficiently? Yes or No, explain your answer using specific information from 2020 transactions. a. F. As a sole-proprietorship, the owner takes draws. Explain what a draw is. How does a draw effect the financial statements? b. How or is it taxed for income tax purposes? C. Should the owner continue his monthly draws in 2021? Yes or No, how does this affect his business. DM Yard services Balance Sheet As of year end of December 31, 2020 ASSETS Current Assets Cash 3,213.02 Accounts Receivable 3,869.25 DM Yard Services Statement of Owner's Equity Year Ending December 31, 2020 Inventory Asset Office Supplies Prepaid Insurance Total Current Assets 1,917.77 69.00 705.00 9,774.04 DM, Capital January 1, 2020 Owner Contribution Net Loss for the year 58,200.00 (15,950.32) 42,249.68 (15,613.52) 26,636.16 DM, Withdrawal DM, Capital December 31, 2020 Property and Equipment: Lawn And Landscaping Equipment Leasehold Improvements Office Equipment Truck Truck With Snow Plow Less: Accumulated Depreciation Total Property and Equipment 4,500.00 850.00 787.50 18,200.00 20,000.00 (4,249.00) 40,088.50 Other Asstes Security Deposits Total Other Assets 1,000.00 1,000.00 TOTAL ASSETS 50,862.54 LIABILITIES AND SHAREHOLDER'S EQUITY Current Liabilities Accounts Payable Credit Cards cu care Payroll Tax Liabilities Fayl Interest Payable Note Payable - Current Portion Sales Tax Payable Wages Payable Total Current Liabilities 425.00 617.02 3,564.20 71.23 3.550.23 365.60 258.00 8,851.28 Long term Liabilities Notes Payable Total Long term Liabilities 15,375.10 15,375.10 OWNER'S EQUITY DM Capital 26,636.16 Total Owner's Equity 26,636.16 Total Liabilities and Owner's Equity 50,862.54 Balance Sheet review: A. Calculate current ratio. a. Can DM Yard Services meet its current obligation? b. How would they (DM Yard Services) address an unexpected major cost? C. Comment on DM Yard Services short-term versus long-term solvency? B. Calculate accounts receivable turnover ratio, using year-end A/R balance only as denominator. a. Comment on result; is this a good position? C. Calculate inventory turnover ratio, adding field wages to CGS in numerator and using year-end inventory for denominator. a. Comment on result taking into account type of inventory items. D. Calculate Fixed Asset Turnover Ratio. a. What does this ratio represent? b. Is the investment in equipment profitable for DM Yard Services? Yes or No, then explain your answer. E. Calculate the debt to equity ratio. Is the company financed primarily with debt or equity? a. Is this a good position? b. Did DM Yard Services handle debt efficiently? Yes or No, explain your answer using specific information from 2020 transactions. a. F. As a sole-proprietorship, the owner takes draws. Explain what a draw is. How does a draw effect the financial statements? b. How or is it taxed for income tax purposes? C. Should the owner continue his monthly draws in 2021? Yes or No, how does this affect his business
