Question

Please answer this question for me and read all the assumptions below:

Problem 1 Using the example for the hardware store in the book "Unde standing Finance Statements" on page 9, please prepare a balance sheet for the end of week 2, 3, 4, & 5 (four balance sheets) XYZ HARDWARE AND BUILDING SUPPLY DECEMBER 31, YEAR BALANCE SHEET ASSETS LIABILITIES & NET WORTH Accounts Payable Notes Payable Accruals Cash 2,000 18,000 Accounts receivable 85,000 65,000 95,000 $ 178,000 Inventory Total Current Assets 210,000 297,000 Total Current Liabilities Land/Buildings Equipment Mortgage Total Long Term Debt 144,000 50,000 50,000 $ 144,000 Furniture & Fixtures 25,000 125,000 322,000 Total Liabilities Total Fixed Assets $ 100,000 Net Worth Total Assets $ 422,000 Total Liabilities $ 422,000 & Net Worth The above example represents the first week of business Balance Sheet (Gill J. 1999).

Assumptions:

1) Assume that $25,000 of inventory will be sold in week 2, and the gross margin is 25% of sales price.

2) Inventory sales increase by $5000 each week for the following three weeks. Sales proportion of credit vs. cash will be 60% cash vs 40% credit. For simplicity, assume sales are made on the first day of the week.

3) Add a weekly expenses of $3,000 for wages and other expenses. This will be paid from the cash account at the end of each week. Shall be subtracted from the Net Worth beginning.

4) The receivable and payable amount for week one will be received and paid at first day of week 5.

5) Accruals will be due for payment every quarter, so it will be due after the 5 weeks.

Answer 1

Week -2 XYZ HARDWARE AND BUILDING SUPPLY DECEMBER 31 YEAR BALANCE SHEET ASSETS LIABILITIES & NET WORT S (2000+10,000-3,000) Cash (85,000+15,000) (210,000-18,750) 9,000 Accounts Payable 100,000 Notes Payable 191,250 Accruals 300,250 Total current liabilities 50,000 Mortgage 50,000 Total Long Term Liability 18,000 Accounts Receivables 65,000 Inventory 95,000 178,000 144,000 Total Current Asset Land/Building Equipment 144,000 322,000 103,250 (100,000+6,250-3,000) 425,250 Furniture & Fixtures 25,000 Total Liabilities 125,000 Net Worth 425,250 Total Laibilities & Net worth Total Fixed Asset Total Assets Sales 25,000 Profit(25,000*25% Cost of Inventory sold (25,000-6,250) 6,250 Add with net worth 18,750 Deduct from Inventories Credit Sales (25,000*60%) Cash sales (25,000*40%) 15,000 Add with accounts receivable add with cash 10,000 Deduct from cash and Net worth Wages & Other Expense 3,000

Week -3 XYZ HARDWARE AND BUILDING SUPPLY DECEMBER 31 YEAR BALANCE SHEET LIABILITIES & NET WORT S ASSETS (9,000+12,000-3,000) Cash (100,000+18,000) (191,250-22,500) 18,000 Accounts Payable 118,000 Notes Payable 168,750 Accruals 304,750 Total current liabilities 50,000 Mortgage 50,000 Total Long Term Liability 25,000 Total Liabilities 125,000 Net Worth 429,750 Total Laibilities & Net worth 18,000 Accounts Receivables 65,000 95,000 178,000 Inventory Total Current Asset Land/Building Equipment 144,000 144,000 322,000 107,750 103,250+7,500-3,000) 429,750 Furniture & Fixtures Total Fixed Asset Total Assets Sales(25,000+5,000) Profit(30,000*25%) Cost of Inventory sold |(30,000-7,500) 30,000 7,500 Add with net worth 22,500 Deduct from Inventories Credit Sales (30,000*60%) Cash sales (30,000*40%) Wages & Other Expense 18,000 Add with accounts receivable add with cash 12,000 3,000 Deduct from cash and Net worth

Week -4 XYZ HARDWARE AND BUILDING SUPPLY DECEMBER 31 YEAR BALANCE SHEET LIABILITIES & NET WORTS ASSETS (18,000+14,000-3,000 Cash (118,000 21,000) (168,750-26,250) 29,000 Accounts Payable 139,000 Notes Payable 18,000 Accounts Receivables 65,000 Inventory 142,500 Accruals 95,000 Total Current Asset 310,500 Total current liabilities 178,000 144,000 Land/Building Equipment Mortgage Total Long Term Liability 50,000 50,000 144,000 322,000 113,500 (107,750+8,750-3000) Furniture & Fixtures 25,000 Total Liabilities Total Fixed Asset 125,000 Net Worth Total Assets 435,500 Total Laibilities & Net worth 435,500 Sales(30,000+5,000) Profit(35,000*25% Cost of Inventory sold (35,000-8,750) 35,000 Add with net worth 8,750 26,250 Deduct from Inventories Credit Sales (35,000*60%) Cash sales 35,000*40% Wages & Other Expense 21,000 Add with accounts receivable add with cash 14,000 3,000 Deduct from cash and Net worth

Week -5 XYZ HARDWARE AND BUILDING SUPPLY DECEMBER 31 YEAR BALANCE SHEET LIABILITIES & NET WORT S ASSETS S (29,000+16,000- 3,000+85,000-83,000) Cash (139,000+24,000- 85,000) (142,500-30,000) 44,000 Accounts Payable 78,000 Notes Payable Accounts Receivables Inventory 112,500 Accruals 95,000 95,000 144,000 Total Current Asset !,500 Total current liabilities 50,000 Mortgage 50,000 Total Long Term Liability 25,000 Total Liabilities 125,000 Net Worth 359,500 Total Laibilities & Net worth359,500 Land/Building Equipment 144,000 239,000 120,500 (113,500+10,000-3000) Furniture & Fixtures Total Fixed Asset Total Assets Sales(35,000+5,000) Profit(35,000*25% Cost of Inventory sold (40,000-10,000) 40,000 10,000 Add with net worth 30,000 Deduct from Inventories

Credit Sales (40,000*60% Cash sales (40000*40%) 24,000 Add with accounts receivable 16,000 add with cash Wages & Other Expense 3,000 Deduct from cash and Net worth Week - Accounts Receivable collected 85,000 Deduct from Accounts Receivable and add with cash Week - Accounts Payable and Note payable Paid 83,000 Deduct from Accounts Payable and Note Payable and Deduct from cash