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Unit 1 Written Assignment - Updated Version

The financial statements of Polly's Pet Products show total assets of $250,000 as of December 31, 2018. The balance sheet indicates current assets of $175,000, including $100,000 of cash. Total liabilities are $161,500, resulting in stockholders' equity of $88,500. The income statement and cash flow statement are not included in the document but are important financial reports along with the balance sheet.

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Simran Pannu
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172 views

Unit 1 Written Assignment - Updated Version

The financial statements of Polly's Pet Products show total assets of $250,000 as of December 31, 2018. The balance sheet indicates current assets of $175,000, including $100,000 of cash. Total liabilities are $161,500, resulting in stockholders' equity of $88,500. The income statement and cash flow statement are not included in the document but are important financial reports along with the balance sheet.

Uploaded by

Simran Pannu
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Analysis of Polly Pet Food Financial Statement

BUS 5110 – Unit 1 assignment

University of People
Financial statements are reports that is detail outline of the important financial accounting

information about your company (Bragg, 2019). The financial statements consist of income

statement, the balance sheet, and the statement of cash flows.

1. Balance Sheet - The balance sheet indicates what the company owns (assets such as

cash, accounts receivable and equipment) and what the company be obligated (liabilities

such as accounts payable and loans) (Investopedia, 2020). Any outstanding difference

between these two sums (the assets and the liabilities) determines what goes to the

owners. The balance sheet is based on the basic equation: Assets = Liabilities + Equity.

2. Income Statement - The income statement indicates how the company performed for a

fixed period. It collects information over a set period (normally annually, monthly, or

quarterly). Main components of the income statement include revenue and expenses

(Investopedia, 2020).

3. Cash flow statement - The cash flow statement shows in flow and out flow of cash for a

fixed period. The cash flow statement tells investors and creditors about the credit

worthiness of the business, where the business is getting its cash from, and on what it is

using its cash (Investopedia, 2020).


Polly's Pet Products

Balance Sheet as of December 31, 2018

ASSETS

CURRENT ASSETS

Cash 100,000
Accounts receivable 50,000
Other assets 25,000

Total current assets 175,000

LONG TERM ASSETS

Fixed Assets 75,000

TOTAL ASSETS 250,000

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable 75,000


Accrued expenses 30,000
Income tax payable 5,000
Current portion of notes payable 12,000
Deferred income taxes 1,500

Total current liabilities 123,500

LONG TERM LIABILITIES


Notes payable (long term) 38,000

TOTAL LIABILITIES 161,500

STOCKHOLDERS' EQUITY

Common stock 5,000


Additional paid-in capital 15,000
1. Cash is the current asset on the balance sheet. The amount is $100,000 (Accounting Hub,

n.d.).

2. Total Current Assets on the balance sheet is the total of Cash, Accounts Receivable and

other assets. The amount is $175,000 (Accounting Hub, n.d.).

3. Total Assets on the balance sheet consists of current assets and fixed assets such as Plant,

Equipment, Patents, Goodwill etc. The amount is $175,000 + $75,000 = $250,000

(Accounting Hub, n.d.).

4. Accrued Expense are the expenses which are incurred but not paid yet. The amount is

$123,000-75,000-5,000-12,000-1,500 = $30,000 (Accounting Hub, n.d.).

5. Notes Payable are written promissory notes in which one party promise to pay the other

party a specific sum of cash. The amount is $161,500-123,500 = $38,000 (Accounting

Hub, n.d.).

6. Stockholders' equity is calculated by subtracting its total liabilities from its total assets.

It is the owners' residual claim on assets when debts have been paid. Stockholders’

Equity = Total Assets – Total Liabilities. The amount is $250,000-161,500 = $88,500

(Accounting Hub, n.d.).

7. Retained earnings (RE) is the amount of net income for the company after it has paid

out dividends to its owner or stockholders. The amount is $88,500-15,000-5,000=

$68,500 (Accounting Hub, n.d.).


8. Total Liabilities & Stockholders' equity represents how much a company would have

in assets if the company went out of business immediately. The amount is $250,000

(Accounting Hub, n.d.).

The objective of financial statements is to deliver information about the financial position,

performance, and variations in financial position of a company that is useful to a wide range of

users in reaching economic decisions. Financial statements are useful when it’s clear, relevant,

reliable and comparable (Bragg, 2019).

Managers uses financial statements for tactical alternatives and approaches are effective

in its growth. Benchmarking financial results according to affordability on the market helps

managers to define areas of strength or weakness and improves to make savings, budgets, and

operating judgments (Accounting for Managers, n.d).


References

Accounting for Managers. (n.d.) Accounting for Managers - Table of Contents.

https://2012books.lardbucket.org/books/accounting-for-managers/index.html.

Accounting Hub. (n.d.). Accounting.  Boundless.com CC BY-SA 4.0. http://oer2go.org/mods/en-

boundless/www.boundless.com/accounting/index.html

Bragg, S. (2019, November 4). The purpose of financial statements.

https://www.accountingtools.com/articles/what-is-the-purpose-of-financial-

statements.html.

Investopedia. (2020, January 29). The Three Major Financial Statements: How They're

Interconnected. Investopedia. https://www.investopedia.com/ask/answers/031815/how-are-

three-major-financial-statements-related-each-other.asp.

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