ACT201 Assignment
ACT201 Assignment
ACT201 Assignment
Equipment Account
Date Explanation Dr. Cr. Balance
Jan 3 Cash 60,000 60,000
Note payable 20,000 80,000
Water Bill
Date Explanation Dr. Cr. Balance
Jan 28 Cash 19,000 19,000
Advertising expense
Date Explanation Dr. Cr. Balance
Jan 31 Cash 5,000 5,000
Miscellaneous Expense
Date Explanation Dr. Cr. Balance
Jan 31 Cash 3,470 3,470
Owner’s Equity
Owner’s capital 100,000
Add: Net income 9,266 109,266
Total liabilities and owner’s equity
142,430
Answer to Question No.2
a) Cost Principle: The cost principle requires that assets
be recorded at the cash amount at the time that an
asset is required. Further, the amount recorded will
not be increased for inflation or improvements in
market value.
Baker Corporation
Statement of Cash Flow
For the year ended December 31,2015
$ $
Cash flow from Operating
Activities: 106000
Net Income
Income 30000
Receivable 20000
Activity
Activity
Activities:
Dividend Payment
Activity
Net Decrease in Cash (30000)
Cash at the Beginning of the
70000
year
40000
Cash at the End of the year
Current assets
Current ratio == current liabilities
820,000
(2015) == 520,000
== 1.58
It means for every dollar of current liabilities Baker Corp
has $1.58 of current assets.
Quick ratio
(2015)
== 00.69
It means that Baker Corp has $ 00.69 liquid asset for $1
of current liabilities.
Account Receivable
Turnover (2015)
Net credit sale
== average net accounts receivable
2,200,000
== 350,000+320,000
2
== 6.57
Baker corp. collect its account receivable 6.57 times on
average over the year.
Profit margin
net income
(2015) == net sales
106,000
== 2200000
== 00.048 or 4.82%
For each dollar of sales, Baker Corp receive 4.82% of that
dollar in net income.
Assets turnover
net sales
(2015) == average total asset
2,200,000
== 1,110,000+ 1,200,000
2
== 1.90 times
it means how Baker Corp uses its asset efficiently to
generate sales.
ROA (2015)
net income
== average total asset
106,000
== 1,110,000+ 1,200,000
2
== 00.092 or 9.17%
It measures how Baker Corp, utilize its asset to generate
net income.
== 0.1536 or 15.36%
For each dollar of investment by the owners, Baker Corp
earned $0.15 of net income.
debt
== asset
840,000
== 1,200,000
== 00.70 or 70%
it means 70% of the total asset is provided by creditors.
== 6.21 times
It indicates that Baker Corp has the ability to meet interest
payments 6.21 times as the come due.