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Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372 Exercise 28
Adjusting and Interpreting Financial Statements (Chapters 4-5)
Biz Zing Inc. (BZI) provides life and work counseling to companies. At the end of 2012, BZI's total assets were $1,120. BZI's unadjusted trial balance includes the following for the twelve months ended December 31, 2013.
Other information:
a. Only six months of depreciation have been recorded so far.
b. BZI has provided services that fulfilled half of the $120 unearned revenue.
c. Until June 2013, BZI paid rent at the beginning of each month. On June 30, 2013, BZI paid for rent from July 1, 2013, through June 30, 2014. Prepaid Rent has not been adjusted since that payment was made.
d. Salaries Payable includes amounts owed to an employee as of June 30, 2013. At December 31, 2013, a total of $15 is owed to the employee.
e. BZI provided $150 of services in December 2013 that have not yet been billed or recorded.
f. During 2013, the company made an initial payment of $20 for income tax. The company's income tax rate is 20%.
Required:
1. Using the unadjusted balances, compute the (a) debt-to-assets, (b) asset turnover, and (c) net profit margin ratios.
2. Prepare the adjusting journal entries required at December 31, 2013.
3. Using properly adjusted balances, prepare a classified balance sheet and multiple step income statement at and for the year ended December 31, 2013.
4. Using the adjusted balances, compute the (a) debt-to-assets, (b) asset turnover, and (c) net profit margin ratios.
5. Compare answers in requirements 1 and 4. Did the adjustments cause BZI's financial statements to indicate (a) more or less financing risk, (b) more or less efficient use of assets in generating revenue, and (c) more or less profit from each dollar of revenue
Biz Zing Inc. (BZI) provides life and work counseling to companies. At the end of 2012, BZI's total assets were $1,120. BZI's unadjusted trial balance includes the following for the twelve months ended December 31, 2013.
Other information:
a. Only six months of depreciation have been recorded so far.
b. BZI has provided services that fulfilled half of the $120 unearned revenue.
c. Until June 2013, BZI paid rent at the beginning of each month. On June 30, 2013, BZI paid for rent from July 1, 2013, through June 30, 2014. Prepaid Rent has not been adjusted since that payment was made.
d. Salaries Payable includes amounts owed to an employee as of June 30, 2013. At December 31, 2013, a total of $15 is owed to the employee.
e. BZI provided $150 of services in December 2013 that have not yet been billed or recorded.
f. During 2013, the company made an initial payment of $20 for income tax. The company's income tax rate is 20%.
Required:
1. Using the unadjusted balances, compute the (a) debt-to-assets, (b) asset turnover, and (c) net profit margin ratios.
2. Prepare the adjusting journal entries required at December 31, 2013.
3. Using properly adjusted balances, prepare a classified balance sheet and multiple step income statement at and for the year ended December 31, 2013.
4. Using the adjusted balances, compute the (a) debt-to-assets, (b) asset turnover, and (c) net profit margin ratios.
5. Compare answers in requirements 1 and 4. Did the adjustments cause BZI's financial statements to indicate (a) more or less financing risk, (b) more or less efficient use of assets in generating revenue, and (c) more or less profit from each dollar of revenue
Explanation
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Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
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