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    Worksheets For The Financial Rosetta Stone

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    The document provides the financial transactions for Campus Products for the year ended December 31, 2020. It includes transactions related to the issuance of stock, borrowing, purchase of property and equipment, inventory purchases and sales, operating expenses, loan repayment, and income taxes. Financial statements including the balance sheet, income statement, and statement of cash flows are to be prepared based on these transactions.

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    Worksheets For The Financial Rosetta Stone

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    58 views4 pages
    The document provides the financial transactions for Campus Products for the year ended December 31, 2020. It includes transactions related to the issuance of stock, borrowing, purchase of property and equipment, inventory purchases and sales, operating expenses, loan repayment, and income taxes. Financial statements including the balance sheet, income statement, and statement of cash flows are to be prepared based on these transactions.

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    Worksheets for The Financial Rosetta Stone

    Original Title

    13. Worksheets for The Financial Rosetta Stone

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    The document provides the financial transactions for Campus Products for the year ended December 31, 2020. It includes transactions related to the issuance of stock, borrowing, purchase of property and equipment, inventory purchases and sales, operating expenses, loan repayment, and income taxes. Financial statements including the balance sheet, income statement, and statement of cash flows are to be prepared based on these transactions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    58 views4 pages

    Worksheets For The Financial Rosetta Stone

    Uploaded by

    me
    The document provides the financial transactions for Campus Products for the year ended December 31, 2020. It includes transactions related to the issuance of stock, borrowing, purchase of property and equipment, inventory purchases and sales, operating expenses, loan repayment, and income taxes. Financial statements including the balance sheet, income statement, and statement of cash flows are to be prepared based on these transactions.

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    © All Rights Reserved
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    Campus Products

    Balance Sheet
    December 31, 2020

    Assets 2020 Start


    Cash $4,000 $0
    Accounts Receivable 34,000 0
    Inventory (FIFO) 3,900 0
    PPE (net)($40,000-$8,000) 32,000 0
    Total Assets $73,900 $0

    Liabilities
    Accounts Payable $3,000 $0
    Taxes Payable 3,000 0
    Notes Payable 22,500 0
    Total Liabilities $28,500 $0

    Equity
    Shareholder Investment $35,000 $0
    Earnings 10,400 0
    Total Equity $45,400 $0

    Total Liabilities & Equity $73,900 $0

    ©2006-2021 Keys to the Vault. All Rights Reserved. 82


    Campus Products
    Income Statement
    For Year-Ended December 31, 2020

    Sales Revenue $49,000


    Cost of Sales (5,100)
    Gross Profit 43,900
    Operating Expenses (20,000)
    EBITDA 23,900
    Depreciation Expense (8,000)
    EBIT 15,900
    Interest Expense ($500 + $2,000) (2,500)
    EBT 13,400
    Tax Expense: (3,000)
    Net Income $10,400

    EBITDA = Operating Income


    = Earnings Before Interest, Taxes, Depreciation, Amortization

    ©2006-2021 Keys to the Vault. All Rights Reserved. 83


    Direct Method
    Campus Products
    Statement of Cash Flows
    For Year-Ended December 31, 2020

    Operating Transactions:
    Cash Inflows: Collections from Customers $15,000
    Cash Outflows: Payments to Suppliers (9,000)
    Payments for Operating Costs (17,000)
    Payments for Interest (2,500)

    Payments for Income Taxes 0

    Net Cash Flows from Operations ($13,500)

    Investing Transactions:
    Cash Inflows: Sales of Property, Plant & Equipment 0
    Cash Outflows: Purchase of Property, Plant & Equipment (40,000)
    Net Cash Flows from Investing ($40,000)

    Financing Transactions
    Cash Inflows: Proceeds from Sale of Equity 35,000
    Proceeds from Bank Financing 30,000
    Cash Outflows: Debt Repayment (7,500)
    Net Cash Flows from Financing Activities $57,500

    Net Change in Cash (1/1/ - 12/31/ ) 4,000

    ©2006-2021 Keys to the Vault. All Rights Reserved. 84


    Campus Products
    20 Financial Transactions
    Campus Products was started on January 1, 2020, in a small Texas town. Its first three transactions
    all took place during the first week of business. A summary of the remaining first-year transactions
    follows.

    Required: You are to record these transactions and prepare Campus Products’ balance sheet, income
    statement and statement of cash flows as of December 31, 2020.

    Transactions:

    1. Sold 35,000 shares of capital stock at $1.00 per share. = $35,000

    2. Borrowed $10,000 from a local bank. The note is due in 5 years and it carries a 5% interest
    charge which is paid on December 31 of each year. Interest = $500.

    3. Bought $40,000 of property, plant and equipment (PPE) – paid cash. This transaction was
    financed by borrowing $20,000 from the bank. (Record the bank loan separately). This loan
    is for 3 years, 10% interest only. Interest is paid annually on December 31. These assets
    have an expected life of 5 years (no salvage value). Straight-line depreciation is used for
    financial reporting. Interest = $2,000. Depreciation = $8,000.

    4. The following inventory transactions occurred during the first year (assume a FIFO cost
    flow):
    4.1 Purchases* 4.2 Sales** _________

    100 units at $10 each = $1,000 100 units at $150 = $15,000 – Cash Sales
    100 units at $20 each = $2,000 170 units at $200 = $34,000 – A/R Sales
    200 units at $30 each = $6,000 270 $49,000 - Total
    400 = $9,000

    *All purchases are on account. **All sales are on account.


    By year-end, all orders have By year-end, collections have
    been fully paid. been received from only
    the first 100 units sold.

    4.3 Record Inventory Sold = [100 x $10] + [100 x $20] + [70 x $30]
    = $1,000 + $2,000 + $2,100 = $5,100

    5. Operating expenses of $20,000 have been incurred and $17,000 paid. A/P = $3,000.

    6. On December 31, repay $7,500 of $10,000 loan.

    7. The income tax for this year is $3,000; taxes will be paid on March 31 of next year.

    ©2006-2021 Keys to the Vault. All Rights Reserved. 85

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