QT Income Statement Statement of Financial Position Summary Analysis

T accounts is one of the fundamental concepts in accounting.  The left side of the Account is always the debit side and the right side is always the credit side, no matter what the account is. For different accounts, debits and credits can mean either an increase or a decrease, but in a T Account, the debit is always on the left side and credit on the right side, by convention. If this subject, accounting, is not your wheel house, you can decline the task, I would completely understand. I would prefer somone who is an expert in accounting.

Hello, it is important when you do the T accounts that you have the 4 major headings in the “T”.  Assets, Liabilities, Expenses, Revenue. For example under Assets, you will have Cash, Accounts Receivable etc.  while under Liabilities you will have Accounts Payable, etc. while under Revenues you will have Sales, etc. Please number the entries under each T-account so that you can correlate back to the PDF, I provided to see what that entry aligns to what. For example when I look under the main T account Expenses, Rent Expense is labeled number one – it aligns to number one in the PDF( On October 1, they found premises for their production facility and paid the landlord $12,000, for six months’ rent in advance).

Tees To Go Ltd.
On October 1, 2022, Malcolm and Mahika decided to start a T-shirt screening and retail
business. They each invested $50,000 cash in exchange for a total of 10,000 shares in
their new business, Tees To Go Limited. During the three months from October 1 to
December 31, the date that they chose to end their fiscal year, the following
transactions occurred:
1.
On October 1, they found premises for their production facility and paid the
landlord $12,000, for six months’ rent in advance.
2.
On October 1, they signed a 5-year Promissory Note at their bank for
$100,000 for equipment. The terms of the Note require interest payments on
the anniversary date of the Note at 6% and principal payments of $20,000
each, also on the anniversary date of the Note.
3.
During October, they acquired $125,000 worth of equipment for cash, with a
useful life of ten years.
4.
They decided that the equipment would be depreciated using the straight-line
method, with a full month’s depreciation in the month of acquisition.
5.
On November 1st they paid for a full year of insurance at the rate of $300 per
month.
6.
During the three-month period from October 1 to December 31, they
acquired $50,000 worth of shirts and materials on account, to make their final
product.
7.
They hired three people to work in the production facility. In the period from
when they were hired, to the end of December, they paid them $18,000.
8.
During the three-month period, they paid utilities and other operating
expenses of $15,000.
9.
During October to December, they generated sales of $75,000, all on credit.
10. During the three months, they collected 75% of their receivables.
11. During the quarter, they paid $47,500 to their suppliers.
12. Neither Malcolm nor Mahika took any salary from the business, but on
December 31 they paid themselves a dividend of $5,000 each.
13. On December 31, they counted inventory and found that there was $5,632
worth of T-Shirts and supplies on hand.
14. In December, a customer who owed $750 declared bankruptcy.
15. On December 31, they owed their employees $2,500 in unpaid wages.
16. NOTE: Ignore income taxes.
1
Required:
Using the Q-T approach discussed in class, prepare the following:
1) Q-T sheet showing how the above transactions are recorded
2) Income statement
3) Statement of financial position
4) A brief commentary (one paragraph) on Tees To Go’s performance this year and its
financial position at the end of the year.
Use the Excel template provided for the Q-T, financial statements and brief commentary.
Instructions: Record all transactions for Tees To Go Ltd in the blank Q-T sheet below.
Closing entries are optional (you can record on the Q-T sheet if you like) but these will NOT be graded.
Once your Q-T is completed, complete Tees To Go’s two financial statements (I/S, SFP) on the following worksheets, and include your commentary.
Q-T for Tees to Go
Part 4) Brief commentary on Tees To Go’s performance this year and its
financial position at the end of the year.
Suggested Solution to SBL using the Q-T
(1)
(5)
(8)
(9)
Bal
Cash
$160
$20
$300
$10
$300
$200
$450
$25
$200
$300
$180
$60
$215
(2)
(3)
(4)
(6)
(7)
(11)
(12)
(16)
Accounts Receivable
(8) $650
$450 (9)
$50 (10)
Bal $150
Common Stock
$160
(1)
Notes Payable
$20
(3)
Inventory
$500
$380
$120
Accounts Payable (Inv)
(11)
$300
$300 (4)
$0
Bal
(12)
Bank Loan
$150
$300
$150
(5)
Bal
(c )
Retained Earnings
$60
$235
$175
(4)
Bal
(13)
Store Equipment
(3)
$30
Accumulated Depreciation
$3
(14)
(6)
Advertising Expense
$25
Interest Expense
(12)
$30
Depreciation Expense
(14)
$3
(7)
(15)
Bal
Wages Expense
$200
$7
$207
Rent Expense
$20
(2)
Cost of Goods Sold
(13)
(10)
$380
Bad Debt Expense
$50
Wages Payable
$7
(16)
(15)
Dividends Declared
$60
$60 (c )
Sales Revenue
$300
$650
$950
(8)
(8)
Bal
Q-T with closing entries
Suggested Solution to SBL using the Q-T
(1)
(5)
(8)
(9)
Bal
Cash
$160
$20
$300
$10
$300
$200
$450
$25
$200
$300
$180
$60
$215
(2)
(3)
(4)
(6)
(7)
(11)
(12)
(16)
Accounts Receivable
(8) $650
$450 (9)
$50 (10)
Bal $150
Common Stock
$160
(1)
Notes Payable
$20
(3)
(4)
Bal
Inventory
$500
$380
$120
Accounts Payable (Inv)
(11) $300
$300 (4)
Bal
Bank Loan
$150
$300
$150
(5)
Bal
(3)
Store Equipment
$30
(13)
Wages Payable
$7
(15)
Accumulated Depreciation
$3
(14)
(6)
Advertising Expense
$25
$25
(a)
$0
Rent Expense
$20
$20
$0
(2)
(16)
(a)
(a)
Interest Expense
(12)
$30
$0
$30
Cost of Goods Sold
(a)
Depreciation Expense
(14)
$3
$3
(a)
$0
Wages Expense
(7) $200
(15)
$7
Bal $207
$207 (a)
$0
(13)
$380
$0
$380
(12)
(a)
Dividends
$60
$60
(c )
(c )
Sales Revenue
$300 (8)
$650 (8)
$950
$950 Bal
$0
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(b)
Bad Debt Expense
(10) $50
$50
(a)
$0
(a)
(b)
(c )
Retained Earnings
$60
$235 (b)
$175
Income Summary
$25
$950 (a)
$20
$30
$380
$3
$50
$207
$235
$235
$0
Closing Entries
Reset revenues and expenses to zero
Transfer income summary to retained earnings
Close dividends to retained earnings
SquadBots Limited
Income Statement
For the year ending December 31, 2022
Sales revenue
Cost of goods sold
Gross margin
Expenses:
Wages
Depreciation (amortization)
Advertising
Bad debts
Rent
Operating income
Interest expense
Net income
$
$
207
3
25
50
20
$
950
380
570
305
265
30
235
SquadBots Limited
Statement of Retained Earnings
For the year ending December 31, 2022
Not required
Beginning balance
Add: net income for the year
$
Less: Dividends declared
Ending balance
$
235
235
60
175
SquadBots Limited
Balance Sheet
As at December 31, 2022
Assets
Cash
Accounts receivable
Inventory
Total current assets
Store equipment
$
Less: accumulated amortization
Net book value
Total assets
$
215
150
120
485
Liabilities
Wages payable
Notes payable
Bank loan
Total liabilities
27
Shareholders’ Equity
Common stock
Retained earnings
Total shareholders’ equity
160
175
335
512
Total Liabilities & SH Equity $
512
30
3
$
$
7
20
150
177
Cash
From
the
Q-T
Sheet
Financing
Financing
Operating
Operating
(1)
(5)
(8)
(9)
$160
$300
$300
$450
Bal
$215
$20
$10
$200
$25
$200
$300
$180
$60
(2)
(3)
(4)
(6)
(7)
(11)
(12)
(16)
Operating
Investing
Operating
Operating
Operating
Operating
Financing $150 / Operating $30
Financing $60
SquadBots Limited
Cash Flow Statement (Direct Method)
For the year ending December 31, 2022
SquadBots Limited
Cash Flow Statement (Indirect method)
For the year ending December 31, 2022
Operating activities:
From customers
For inventory purchases
For rental of space
For advertising expenses
For salary and wages expenses
For interest expense
Cash used for operating activities
Operating activities:
Net income
Add: Depreciation
Changes in assets/liabilities
Increase in accounts receivable
Increase in inventory
Increase in wages payable
Cash used for operating activities
Financing activities:
From shareholders
For dividends
From bank
Cash from financing activities
$ 750,000
(500,000)
(20,000)
(25,000)
(200,000)
(30,000)
$ (25,000)
160,000
(60,000)
150,000
250,000
Investing activities:
Financing activities:
From shareholders
For dividends
From bank
Cash from financing activities
$ 235,000
3,000
(150,000)
(120,000)
7,000
$
(25,000)
160,000
(60,000)
150,000
250,000
Investing activities:
Purchase of store equipment
Net change in cash for the year
(10,000)
$ 215,000
Purchase of store equipment
Net change in cash for the year
$
(10,000)
215,000
Cash, beginning of year
Cash, end of year
$ 215,000
Cash, beginning of year
Cash, end of year
$
215,000
Note: Note Payable does not appear since it was not issued for cash
(it is a non-cash transaction; issued for equipment)
BLANK Q-T