accouting project

ACCOUTNING 2415 PROJECT

Rose and Jimmy are two winners that have been in the alternative energy wind turbine business for two (2) years. Business is going well, but they both admit that they could use help on the financial side of things. As such, they look to you to get their books in order and plan for the future.

Requirements:

1. Prepare a statement of cash flow as of 12/31/2012 using the Company’s financials and the

Indirect Cash Flow method.

2. Prepare journal entries for the 2013 transactions and provide the updated ending inventory

account balances.

3. What is the gross margin for the 2013 activity?

On 1/5/2013 the Company sold $36,000 worth of inventory with associated cost of $10,800

On 1/10/2013 the Company purchased $76,400 worth of raw material in anticipation of a new job.

On 1/25/2013 the Company requisitioned $62,500 into WIP to begin a new order

On 1/25/2013 the Company completed Job # 55440-1A with a total value of $74,100

On 2/1/2013 the Company sold $44,980 worth of inventory with associated cost of $13,494

**Note 1: The Company did not pay any dividends from 2011 through 2013

**Note 2: In 2012 the Company sold $20,000 worth of Long-Term Investments with a net gain on sale of $5,460

2012 2011

Sales 559,625$ 447,700$ Cost of Merchandise Sold 167,888$ 134,310$

Gross Profit 391,738$ 313,390$

Operating Expenses: Selling Expenses 102,886$ 213,300$ Administrative Expenses 113,300$ 150,000$

Total Admin Expenses 216,186$ 363,300$

NET INCOME: 175,552$ (49,910)$

2012 2011 ASSETS: Cash 66,780$ 100,000$ Account Receiveable 145,630$ 25,650$ Inventories:

Finished Goods 85,550$ 55,040$ Work in Process 95,550$ 95,520$ Raw Materials 33,605$ 22,330$

Supplies 14,550$ 15,400$ PrePaid Rent 8,000$ 12,000$ Equipment 210,437$ 75,600$ Accumualted Depreciation (66,000)$ (36,000)$

Long-Term Investments 25,600$ 45,600$

TOTAL ASSETS: 619,702$ 411,140$

LIABILITIES: Accounts Payable 142,350$ 42,350$ Accrued Salaries 14,300$ 13,200$ Income Tax Payable 7,500$ 5,500$ Long-Term Debt 130,000$ 250,000$

TOTAL LIABILITIES: 294,150$ 311,050$

OWNERS' EQUITY: Common Stock ($1 @ Par) 100,000$ 100,000$ APIC 50,000$ 50,000$ Retained Earnings 175,552$ (49,910)$

TOTAL OWNERS' EQUITY: 325,552$ 100,090$