ACCOUNTING-This project has 2 distinct parts. The first part is the creation

Project #2

This project has 2 distinct parts. The first part is the
creation of journal entries, Income Statement and Balance Sheet. No T-accounts
are required to be turned in. The second part is using ratios to evaluate two
public companies and making conclusions.

Grading:

The project will be graded on the following scale:

Requirement	Points
Part 1:
Journal Entries: Accounts used, Type included and Amount	60
Income Statement and Balance Sheet: Accounts correctly summarized and correct presentation	10
Strategic Question	10
Part 2:
Ratios: Correct formula and Ratio	10
Strategic Question	5
Both Parts:
Overall Presentation: Professional, clear and typed – no electronic submissions	5
TOTAL	100

Due Date:

Part 1 is due on November 20^th

Part 2 is due on December 4^th

However, both parts can be turned in together and anytime
earlier.

Part 1:

You start your own business, “Float Your Boat.” Your new
company manufactures and sells white water rafts and related equipment. Most of
the rafts and equipment you purchase and sell but you want to expand to manufacturing
what you sell. You currently manufacture yourself most of the paddles you sell
out of specially treated wood.

You want to create an accurate set of accounting records so
you are able to get funding from other people and/or banks. So, even though you
are not a public company yet, you want to create the same financial statements
that you would if you were a public company. Below are economic events that may
impact your accounting records. Create journal entries for those events and
complete the Income Statement and Balance Sheet for the period ending July 31^th.
Remember, you may need to create adjusting journal entries. You record journal entries as the events occur
but no adjusting entries are needed each month, only for the period ending July
31^st. The business is new so there are no opening balances.

Event	Date	Event	Amount
1	May 15	You contribute your own money to the corporate bank account	100,000
2	May 15	You file incorporation papers and pay cash for the fee. Your Articles of incorporation provide that “Float Your Boat” authorize (can issue) 1,000 shares of common stock (par value $1 per share). You own 100% of these via your contribution made on the same day.	100
3	May 21	Acquire office supplies on account	900
4	May 22	Acquire inventory that includes rafts and equipment on account	5,000
5	June 1	Rented store space and paid cash for 6 months’ rent in advance	18,000
6	June 1	Purchased on account furniture and racks for store. These items are expected to last 5 years with no residual value	20,000
7	June 5	First sale! Sold a basic raft (no warranty) on account	600
8	June 5	Paid cash for website and advertising	400
9	June 6	Bought wood to make paddles that you will sell	200
10	June 10	Paid cash to lower amount due for previously purchased office supplies	300
11	June 10	Sold rafting equipment on account	400
12	June 11	Collected cash from account receivables	200
13	June 20	A customer special ordered and paid cash for 2 paddles with engravings to match his tattoos. These will be completed and delivered mid-July	2,000
14	June 30	You realized you have used half of your supplies	450
15	July 1	Hired a sales person for the store and gave them a hiring bonus. The salary is 2,000 a month, paid monthly on the last day of each month	500
16	July 1	Borrowed money from the bank at a 6% annual interest rate. You expect to pay 10% of this off during this year.	100,000
17	July 5	Sold a high-end raft that comes with a 5 year warranty. You expect that claims will come in each year that equals 1% of the selling price of rafts that come with the warranty.	1,500
18	July 10	Delivered the special order paddles from June 20 and charged a delivery fee	50
19	July 15	Customer returned some rafting equipment purchased on June 2^nd and you gave them a refund	80
20	July 15	Bought more wood for paddles with the terms of 2/10, n/30 and you pay for them the same day with cash	800 before any discount
21	July 15	Paid freight to ship the wood for paddles to you (freight-in)	60
22	July 20	Sold one of the pieces of furniture that was in your store that you paid $300 for and had purchased on June 1	200
23	July 22	Declared a dividend	.25 per share
24	July 28	Sold two raft (his and hers) to a couple that just got married. You gave them a 2% discount.	1,000 before any discount
25	July 30	Paid the dividend	.25 per share

Part 1 Continued:

Strategic Question:
Since “Float Your Boat” is new, there are many decisions the owner will have to
make as his/her business grows. If you were the accountant instead of the
business owner, what advice or recommendations would you give the owner for improvement
or for future consideration? This can be anything that we have covered in
class: compensation of employees, inventory method, etc…

Part 2:

Find and copy the Income Statement and Balance Sheet of two
publically traded companies that are in the same industry. You must include
these copies with your turned in project. Calculate the following ratios:

	Ratio	Found in Chapter:
1	Current Ratio	4
2	Quick Ratio	4
3	Total Debt to Total Assets	9
4	Total Debt to Total Equity	9
5	Return on Stockholder’s Equity	4
6	Gross Profit Rate or Percentage	4
7	Return on Sale or Profit margin	4
8	Return on Assets	4
9	Earnings Per Share	2
10	Price to Earnings (P to E)	2

Strategic Question:
Which of the two companies would you invest in and why?

ACCOUNTING-This project has 2 distinct parts. The first part is the creation

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