On pages 4 and 5 of this document, you will find the adjusted trial balance and the prior period balance sheet for Be Prepared Inc., a corporation.
Phase #1
Using Be Prepared, Inc.'s adjusted trial balance and prior period's balance sheet (see pages 5 and 6 of this document), prepare the following Financial Reports in good form using Microsoft Excel or Microsoft Word:
• Multi-Step Income Statement for the month of January 2015
• Statement of Retained Earnings for the month of January 2015Note: There are no prior period adjustments and all dividends declared are cash dividends in the amount of $35,000.
Phase #2
Using Be Prepared, Inc.'s adjusted trial balance and prior period's balance sheet, prepare the following Financial Report in good form using Microsoft Excel or Microsoft Word:
• Comparative Balance Sheet for the months of December 2014 and January 2015
Phase #3
Use the Comparative Balance Sheet you prepared in Phase #2 and the following additional information to prepare the Statement of Cash Flows for the month of January 2015. Use the indirect method to prepare the operating activities section.
• Issued 10,000 new shares of common stock when the stock was selling on the market at an average price of $10 per share on the date of sale and the par value of the stock was 50 cents.
• Purchased land with a cost $200,000. A down payment was made in the amount of $100,000 cash and a 10% 5-year note payable was signed for the difference.
• Purchased additional store equipment for $20,000 paying cash.
• The $15,000 notes receivable was related to the sale of merchandise inventory to a credit customer this period. Hint: The increase in notes receivable should be reported as an addition to the operating activities section of the statement of cash flows.
• Issued bonds with a face amount of $150,000 at 97. Hint: The amortization of the bond discount in the amount of $450 should be reported as an addition to the operating activities section.
• Paid off the mortgage payable of $175,000.
• The company repurchased 20,000 shares of its common stock on the open market for $9 per share.
• The company reissued 10,000 of the treasury shares at a price of $18 per share.
• Issued 1,500 shares of preferred stock at $105 per share.
• Paid cash dividends of $35,000 to preferred and common stockholders.
Phase #4
Using the Multi-Step Income Statement and the Comparative Balance Sheets you prepared in the previous phases, prepare the following Ratios for January 2015:
1. Current Ratio
2. Acid-Test Ratio
3. Debt Ratio
4. Profit Margin Ratio
5. Gross Margin Ratio