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The document provides the year-end balance sheet for Sullivan Camping Outfitters as of December 31, 2022 and describes 7 transactions that occurred from January 1-6, 2023, including the issuance of new stock. The student is asked to: 1) Calculate earnings per share for 2022; 2) Describe each transaction and its impact; and 3) Present the adjusted balance sheet as of January 6, 2023, incorporating the transaction details. The student is also asked to calculate earnings per share for 2023 given net income of $350,000 and no additional common stock transactions.

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sunrise foods
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137 views

Assignment

The document provides the year-end balance sheet for Sullivan Camping Outfitters as of December 31, 2022 and describes 7 transactions that occurred from January 1-6, 2023, including the issuance of new stock. The student is asked to: 1) Calculate earnings per share for 2022; 2) Describe each transaction and its impact; and 3) Present the adjusted balance sheet as of January 6, 2023, incorporating the transaction details. The student is also asked to calculate earnings per share for 2023 given net income of $350,000 and no additional common stock transactions.

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sunrise foods
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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NRRT650.

801 Homework 1
Due Tuesday at midnight of Learning Module 4

QUESTION SET 4. Following is the “end of year” balance sheet for Sullivan Camping Outfitters, Inc. (SCO) as of December
31, 2022, after all 2022 operations have been closed out (This means that the balance in Retained Earnings in the
12/31/22 Balance Sheet provided below already includes the net income from 2022. In 2022, the corporation generated
a net income of $260,000. Answer the following questions using this information and the financial statement below. (35
points)

A. Calculate SCO’s earnings per share at the end of the year, 2022. Show the computation.

B. Assume that on January 1, 2023, SCO issued 6,500 new shares of $8 par value common stock for a market price
of $10 per share. By the end of the day on January 6, 2023, and prior to reopening for the year on January 10,
SCO had completed the following transactions (and only these transactions).

Transaction 1. The sale of 6,500 new shares of $8 par value stock for a market price of $10 per share.

Transaction 2. 60 percent of the proceeds of the stock sale were used to immediately pay down the long-term debt.

Transaction 3. A new company vehicle was purchased for $22,500, of which the entire amount was through a new 3-
year installment loan from their bank.

Transaction 4. 15 percent of the proceeds were used to pay down accounts payable to suppliers.

Transaction 5. $5,000 worth of new inventory to sell in the business was purchased from their supplier on credit.
They will be required to pay this back by the end of June 2023.

Transaction 6. 10 percent of the proceeds were used to pay the first-round of 2023 stock dividends to shareholders.

Transaction 7. The remainder of the proceeds from the stock sale was deposited in SCO’s cash account.

B1. Below the description of each of the 7 transactions above in B, indicate the following a) the formula for
computing the transaction. If no formula was used, simply put “no formula used”, b) the amount of cash that
was affected by that transaction and whether cash increased or decreased. If cash was NOT affected by that
transaction, indicate that, c) what specific balance sheet accounts are impact by the transaction, d) THEN…

B2. Compile the balance sheet, for the end of the day, January 6, 2023; after the new is stock is issued and the
proceeds are disbursed, and transactions recorded as described based on the above transactions. Your answer
should be in the form of the same balance sheet with new balances in the accounts that were impacted by the
transactions above. Any empty Balance Sheet is also provided on the next page for your answer, below the
original balance sheet. Note that not all accounts will be impacted by the above transactions. The original
12/31/2022 Balance sheet, and the answer template are found on the following page.
SULLIVAN Camping Outfitters, INC.
Balance Sheet; December 31, 2022
Current Assets Current Liabilities
Cash $ 45,000 Wages Payable $ 25,000
Marketable Securities 15,000 Accounts Payable to suppliers 30,000
Accounts Receivable 10,000 Short term Bank Notes Payable 25,000
Inventory 125,000 Total Current Liabilities $ 80,000
Prepaid Expenses 10,000
Total Current Assets $ 205,000 Long-term Debt
Equipment Loans Payable $ 100,000
Mortgage on Building 300,000
Fixed Assets Total Long-term Debt $ 400,000
Net Fixed Assets $ 1,000,000
Total Fixed Assets $ 1,000,000 Owners’ Equity
Common Stock (25,000 shares @ $8 par value) $ 200,000
Additional Paid in Capital 0
Retained Earnings 525,000
Total Owners’ Equity $ 725,000

Total Assets $1,205,000 Total Liabilities and Owner’s Equity $ 1,205,000

Use the balance sheet below to insert the “post-transactions” balances.

SULLIVAN Camping Outfitters, INC.


Balance Sheet; January 6, 2023
Current Assets Current Liabilities
Cash $ Wages Payable $
Marketable Securities $ Accounts Payable to suppliers $
Accounts Receivable $ Short term Bank Notes Payable $
Inventory $ Total Current Liabilities $
Prepaid Expenses $
Total Current Assets $ Long-term Debt
Equipment Loans Payable $
Mortgage on Building $
Fixed Assets Total Long-term Debt $
Net Fixed Assets $
Total Fixed Assets $ Owners’ Equity
Common Stock (XXXXXX shares @ $8 par value) $
Additional paid in capital (XXXXX shares @ $X)
Retained Earnings $
Total Owners’ Equity $

Total Assets $ Total Liabilities and Owner’s Equity $

Insert the balances for all accounts and section totals, regardless of if their balances were impacted by the
transactions or not. Include ALL totals.

C. Suppose that on December 31, 2023, SCO reports a net income for the 2023 year of $350,000. No additional
transactions were completed that affect the Common Stock accounts. What are the earnings per share at the
end of 2023? Show the computation.

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