Balance Sheet For Big Ed's Motorcycle Shop December 31

Balance Sheetbig Eds Motorcycle Shopbalance Sheetdecember 31 2015ass

Balance Sheet Big Ed's Motorcycle Shop Balance Sheet December 31, 2015 Assets Current Assets: Cash Accounts Receivable Merchandise Inventory, Parts Merchandise Inventory, Motorcycles Office Supplies Prepaid Insurance Total Current Assets Property, Plant, & Equipment: Office Equipment Accumulated Depreciation-Office Equipment Store Equipment Accumulated Depreciation-Store Equipment Shop Equipment Accumulated Depreciation-Shop Equipment Total PP & E Total Assets Liabilities and Owner's Equity Current Liabilities: Accounts Payable Salaries Payable Interest Payable Total Current Liabilities Long-Term Liabilities Notes Payable Total Liabilities Owner's Equity Ed Silver, Capital Total Liabilities and Owner's Equity Income Statement Big Ed's Motorcycle Shop Income Statement For the Period Ended December 31, 2015 Sales Cost of Merchandise Sold Gross Profit Selling Expenses: Sales Salaries Expense Service Salaries Expense Advertising Expense Depreciation Expense-Store Equipment Depreciation Expense-Shop Equipment Miscellaneous Selling Expense Administratvie Expenses: Office Salaries Expense Depreciation Expense-Office Equipment Rent Expense Insurance Expense Office Supplies Expense Miscellaneous Administrative Expense Income from Operations Other Expense: Interest Expense Net Income Statement of Cash Flows Big Ed's Motorcycle Shop Statement of Cash Flows For the Period Ended December 31, 2015 Cash Flows from Operating Activities Net Income Depreciation Decrease in Accounts Receivable Decrease in Merchandise Inventory, Parts Increase in Merchandise Inventory, Motorcycles Increase in Office Supplies Increase in Prepaid Insurance Increase in Accounts Payable Increase in Interest Payable Increase in Salaries Payable Total adjustments Net Cash Flows Provided from Operating Activities Cash Flows from Investing Activities Shop Equipment Purchased Net Cash Flows Used by Investing Activities Cash Flows from Financing Activities Cash Paid for Owner Draw Cash received for Note Payable proceeds Net Cash Flow Used by Financing Activities Net change in cash Cash, beginning Cash, ending 2014 PCTB Big Ed's Motorcycle Shop Post Closing Trial Balance For the period ended December 31, 20x7 DR CR Cash 81,900 Accounts Receivable 179,200 Merchandise Inventory, Parts 115,000 Merchandise Inventory, Motorcycles 71,980 Office Supplies 4,220 Prepaid Insurance 1,880 Office Equipment 50,000 Accumulated Depreciation-Office Equipment 7,500 Store Equipment 52,000 Accumulated Depreciation-Store Equipment 7,860 Shop Equipment 168,600 Accumulated Depreciation-Shop Equipment 41,040 Accounts Payable 65,000 Salaries Payable 7,500 Interest Payable 4,500 Note Payable (due ,200 Ed Silver, Capital 534,,,780 Solution Big Ed's Motorcycle Shop End of Period Worksheet For the period ending 12/31/2015 Unadjusted Trial Balance Adjusting Entries Adjusted Trial Balance Income Statement Balance Sheet DR CR DR CR DR CR DR CR DR CR Cash 184,,,500 Accounts Receivable 145,,,200 Merchandise Inventory, Parts 100,,,,000 Merchandise Inventory, Motorcycles 110,,,000 Office Supplies 6,,,,220 Prepaid Insurance 4,,,,880 Office Equipment 50,,,000 Accumulated Depreciation-Office Equipment 7,,,,500 Store Equipment 52,,,000 Accumulated Depreciation-Store Equipment 7,,,,260 Shop Equipment 183,,,600 Accumulated Depreciation-Shop Equipment 41,,,,400 Accounts Payable 66,,,720 Salaries Payable 9,,,500 Interest Payable 5,,,376 Note Payable (due ,,,200 Ed Silver, Capital 534,,,180 Ed Silver, Drawing 42,,,000 Sales 1,488,,488,,488,000 Cost of Merchandise Sold 930,,,,000 Sales Salaries Expense 207,,,,840 Service Salaries Expense 100,,,,980 Office Salaries Expense 1,,,500 Advertising Expense 52,,,560 Depreciation Expense-Office Equipment 10,,,000 Depreciation Expense-Store Equipment 10,,,400 Depreciation Expense-Shop Equipment 18,,,360 Miscellaneous Selling Expense 1,,,920 Rent Expense 37,,,620 Insurance Expense - ,,,200 Interest Expense 5,,,376 Office Supplies Expense 1,,,,060 Miscellaneous Administrative Expense 1,,,,212,,212,,,,266,,266,,393,,488,,,,,264 Journal 1,488,,488,,,400 Adjusting Entries Debit Credit Depreciation Expense-Office Equipment 10,,000/5 Accumulated Depreciation-Office Equipment 10,000 Depreciation Expense-Store Equipment 10,,000/5 Accumulated Depreciation-Store Equipment 10,400 Depreciation Expense-Shop Equipment 18,,600/10 Accumulated Depreciation-Shop Equipment 18,360 Cost of Merchandise Sold 3,,000-97,000 Merchandise Inventory-Parts 3,000 Office Supplies Expense 1,500 Office Supplies 1,500 Sales Salaries Expense 3,000 Service Salaries Expense 5,000 Office Salaries Expense 1,500 Salaries Payable 9,,000+5,000+1,500 Insurance Expense 1,200 Prepaid Insurance 1,200 Interest Expense 5,,200X.08 Interest Payable 5,376 Journal Closing Entries Debit Credit Sales 1,488,000 Cost of Merchandise Sold 933,000 Sales Salaries Expense 210,840 Service Salaries Expense 105,980 Office Salaries Expense 1,500 Advertising Expense 52,560 Depreciation Expense-Office Equipment 10,000 Depreciation Expense-Store Equipment 10,400 Depreciation Expense-Shop Equipment 18,360 Miscellaneous Selling Expense 1,920 Rent Expense 37,620 Insurance Expense 1,200 Interest Expense 5,376 Office Supplies Expense 3,060 Miscellaneous Administrative Expense 1,920 Income Summary 94,264 Ed Silver, Capital 42,000 Ed Silver, Drawing 42,000 Income Summary 94,264 Ed Silver, Capital 94,264

Paper For Above instruction

Big Ed's Motorcycle Shop's financial statements for the year ending December 31, 2015, provide a comprehensive overview of its financial health, operations, and cash flows. Analyzing these documents reveals detailed insights into the company's assets, liabilities, equity, income, expenses, and cash movements, which are critical for understanding its financial stability and operational efficiency.

Introduction

Financial statements are essential tools for assessing the economic position of a business. They include the balance sheet, income statement, and statement of cash flows, each offering vital information about different aspects of a company's financial status. For Big Ed's Motorcycle Shop, these statements not only depict the company's financial condition at the closing date but also elucidate the operational efficiency and cash management practices during the fiscal period.

Assets and Liabilities Analysis

The balance sheet as of December 31, 2015, shows total assets comprising current assets and property, plant, & equipment (PP&E). Current assets include cash, accounts receivable, merchandise inventory, office supplies, and prepaid insurance, reflecting liquidity and operational readiness. The total current assets support the business's short-term obligations and working capital needs. The merchandise inventory, subdivided into parts and motorcycles, indicates stock holdings essential for sales operations.

PP&E includes office equipment, store equipment, and shop equipment, net of accumulated depreciation. The accumulated depreciation on each asset category diminishes the book value, aligning with standard accounting practices. The total assets amount to the sum of these assets, elucidating the scale of operational infrastructure.

Liabilities include current liabilities like accounts payable, salaries payable, and interest payable, alongside long-term liabilities that feature notes payable. These liabilities indicate the company's obligations to suppliers, employees, creditors, and long-term lenders. The specific values, such as accounts payable at $66,720 and long-term notes payable, are critical in evaluating liquidity and solvency.

Owner's equity, represented by Ed Silver's capital account, sums to over $534,000, signifying invested capital and retained earnings. The balance between liabilities and equity reflects the company's leverage and financial stability.

Income Statement and Operational Performance

The income statement for 2015 reveals total sales of approximately $1.488 million, with a cost of merchandise sold amounting to around $930,000, resulting in a gross profit of roughly $558,000. This margin indicates efficiency in controlling costs relative to sales.

Selling expenses, including salaries for sales and service staff, advertising, depreciation, and miscellaneous selling costs, account for significant expenditures, reducing net income but reflecting active marketing and sales efforts. Administrative expenses encompass office salaries, rent, insurance, supplies, and other overheads, illustrating the company's structure and operational overheads.

The net income, approximately $94,264 after accounting for all expenses, indicates profitability, though the margins suggest areas for cost control and operational improvements.

Cash Flow Analysis

The statement of cash flows demonstrates the company's liquidity management, showing the net cash provided by operating activities—primarily driven by net income adjusted for non-cash expenses like depreciation and working capital changes. Adjustments such as decreases in accounts receivable and inventories enhance the cash position, while increases in payable accounts reflect effective cash management strategies.

Investing activities show purchase of shop equipment, while financing activities reveal cash flows from owner draws and note payable proceeds. The net decrease in cash aligns with the overall operational and investing cash flows during the period.

Conclusion

Overall, Big Ed's Motorcycle Shop exhibits a financially stable position at year's end, with sufficient liquidity, manageable liabilities, and consistent profitability. The detailed analysis of its assets, liabilities, operations, and cash flows indicates a well-established business with effective financial and operational management strategies. Continuous monitoring and strategic cost management can further enhance its profitability and financial robustness.

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