case study solution حل
Using Accounting for Decision Making
Assessment : Case Study
Donna Martin opened a clothing store on 1 January 2014 called Donna’s Boutique. At that time she deposited $60 000 cash in the business’s checking account. Donna then wrote business checks to purchase $14 000 of inventory and $32 000 of shop equipment, and paid two year’s rent in advance for shop space.
| Payment for shop equipment | $32 000 |
| Payment for two years’ rent of shop | 4 800 |
| Payment for purchase of inventory (including $14 000 beginning) | 46 000 |
| Receipts from cash sales | 78 000 |
| Payments for operating expenses | 4 000 |
| Withdrawals of cash for personal use | 22 000 |
On December 31 2014 Donna asks for your assistance. She says, “The ending cash balance in the business check book is $9 200. Since my initial investment was $60 000, the business seems to have had a net loss of $50 800.
You agree to help Donna. She tells you that the business used periodic inventory system during 2014
Required:
1-Prepare 2014 income statement for 2014 and show supporting calculations.
2-Prepare 2014 cash flow statement for 2014andshow supporting calculations.
3-Prepare a balance sheet as of 31 December 2014 andshow supporting calculations.
4-Calculate the below applicable ratios and briefly discuss each ratio:
Return on Owner’s Equity
Operating Cash Flow Margin
Cash Return on Total Assets
Cash Return on Owner’s Equity
Current Ratio
Debt Ratio
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