Year 2 Transaction List: . . . . . . 0 . . Acquired $550,000 by signing a note payable with a local bank Sold 25,000 shares of $22 Common Stock for $1,500,000 Purchased Equipment for $300,000|| Purchased Inventory on Account - 25,000 Units at $1.15 per unit Sold 15,000 units at $3.50 on Account Record COGS for Sales on Account Collect $70,000 on Account Paid $117,250 of Accounts Payable Purchased Inventory on Account - 170,000 Units at $1.50 per unit Sold 175,000 units at $3.50 on Account Record COGS for Sales on Account Collect $472,500 on Account Paid $218,600 of Accounts Payable Purchased Inventory on Account - 275,000 Units at $1.35 per unit Sold 200,000 units at $3.50 on Account Record COGS for Sales on Account Collect $735,000 on Account Purchased Inventory on Account - 300,000 Units at $1.15 per unit Paid $494,150 of Accounts Payable Paid Sales & Marketing Expenses of $30,000 Paid Operating Expenses of $75,708 Record Wages Payable of $40,000 Paid Product Line Research & Development Expenses of $150,000 Paid Advertising Expenses of $87,500 Made the yearly required payment on the note payable. The note carries a 7% interest rate and requires payments of $50,000 plus interest each December 31. Record first year of depreciation expense on equipment purchased in Year 2 with salvage value of $38,000 & useful life of 7 Yrs. Declared a $10,000 cash dividend for stockholders Paid a $10,000 cash dividend for stockholders . . . . . . . . 1 2 Balance Sheet 3 Events Liab 4 Div Payable Notes Payable Wages Payable Land Building 1-1 Accum Depr Acct Payable $ 50,000.00 $ 250,000.00 $ 8,333.00 $ 118,000.00 Common Stock $ 200,000.00 Equity APIC Retained Earnings 100,000.00 $ 176,167.00 5 $ 6 $ 550,000 7 $ 550,000 $ 950,000 8 9 $ 28,750 10 $ $ 52,500 (29,150) 11 12 13 $ $ (117,250) 255,000 14 15 Assets Cash Acct Rec Inventory Equipment $ 257,000.00 $ 17,500.00 $ 28,000.00 $ 550,000 $ 1,500,000 $ (300,000) $ 300,000 $ 28,750 $ 52,500 $ (29,150) $ 70,000 $ (70,000) $ (117250) $ 255,000 $ 612,500 $ (254,100) $ 472,500 $ (472,500) $ (218,600) $ 371,250 $ 700,000 $ (272,850) $ 735,000 $ (735,000) $ 345,000 $ (494,150) $ (30,000) $ (75,708) $ $ 612,500 (254,100 16 Beginning Balances as of Dec 31, Year 1 1.Acquired $550,000 by signing a note payable with a local bank 2. Sold 25,000 shares of $22 Common Stock for $1,500,000 3. Purchased Equipment for $300,000 4. Purchased Inventory on Account - 25,000 Units at $1.15 per unit 5a. Sold 15,000 units at $3.50 on Account 5b. COGS for Sales on Account 6. Collect $70,000 on Account 7. Paid $117.250 of Accounts Payable 8. Purchased Inventory on Account - 170,000 Units at $1.50 per unit 9a. Sold 175,000 units at $3.50 on Account 9b. COGS for Sales on Account 10. Collect $472,500 on Account 11. Paid $218,600 of Accounts Payable 12. Purchased Inventory on Account - 275,000 Units at $1.35 per unit 13a. Sold 200,000 units at $3.50 on Account 13b. COGS for Sales on Account 14. Collect $735,000 on Account 15. Purchased Inventory on Account - 300,000 Units at $1.15 per unit 16. Paid $494,150 of Accounts Payable 17. Paid Sales & Marketing Expenses of $30,000 18. Paid Operating Expenses of $75,708 19. Record Wages Payable of $40,000 20. Paid Product Line Research & Development Expenses of $150,000 21. Paid Advertising Expenses of $87,500 17 18 19 $ $ (218,600.00) 371,250 20 700,000 (272,850 21 $ 22 23 $ $ 345,000.00 (494,150.00) 24 25 26 27 40,000 $ $ $ $ $ (30,000) (75,708) (40,000) (150,000) (87,500) 28 $ $ (150,000 (87,500) 29 22. Made the yearly required payment on the note payable. The note carries a 7% interest rate and requires payments of $50,000 plus interest each December 31. $ (88,500) $ (50,000) $ (38,500) 30 $ 37,429.00 $ (37,429) 31 32 23. Record first year of Depreciation on Equipment Purchased in Year 2 with Salvage Value of $38,000 & useful life of 7 yrs 24. Declared a $10,000 cash dividend for stockholders 25. Paid a $10,000 cash dividend for stockholders $ Balance at end of Yr 2 $ $ (10,000) 10,000.00 (10,000.00) 33 $ $ 288,000 $ (10,000) 2,012,792 $ 34 105,000$ 471,900 $ 300,000 $ 50,000 $ 250,000-$ 45,762 $ $ 500,000 $ 40,000 $ 750,000 $ 1,050,000 $ 515,930 35 36 37 $ Total Assets Total Liabilities & Equity 3,143,930 3,143,930 38 $ 39 A B D E F G H 1 j K L 1 Goods Available for Sale Price/ Units Unit Total Cost of Goods Sold Price/ Units Unit Total Ending Inventory Price/ Units Total 2 Unit 3 Beg Bal 4. Purchases: 5 6 7 8 9 10 11 12 13 Total 14 15 NOTE: You will need to calculate your estimated COGS for the budget template tab using the 16 Weighted Avergae method discussed in L05-6 17 18 Inventory Tracking 19 20 21 A B E F G H 1 K L M N 0 1 2 Flexible Budget 3 4 Actual Year 2 at 390,000 Units Sold Pro-Forma at 415,000 Units Sold Pro-Forma at 440,000 Units Sold 5 5 6 6 7 8 9 9 10 11 12 Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Sales & Marketing Operating Costs Wages Research & Development Expense Advertising Expense Depreciation Exp Interest Expense Net Income 13 14 15 16 17 18 Inventory Production 19 20 *use ending inventory from CORRECTED horizontal balance sheet for beginning inventory for the 21 22 Beginning Inventory for Jan 1 Year 3 + Purchases - Estimated COGS = Desired Ending 23 *at 415,000 units at average inventory purchase price per unit from Year 2 (rounded to 2 decimal places) 24 25 Purchases = 26 27 Note: Calculate next year's estimated purchases for desired ending inventory of $35,000, assuming your ending inventory from the horizontal balance sheet is your beginning inventory for the next year. For Estimated COGS, use the previously calculated weighted average COGS and last years actual units Breakeven Calcuation 28 29 30 31 BEEFC/(CM/Unit) A B [ 1 Income Statement Year 2 N 2 3 3 4 Sales Revenue 5 Less: Cost of Goods Sold 6 Gross Margin $ 7 9 10 11 12 13 8 Less: Expenses Sales & Marketing Operating Costs Wages Research & Development Expense Advertising Expense Depreciation Expense Interest Expense 16 Total Operating Expenses 17 18 Net Income (Loss) 14 15 $ $ 19 20 21