Question

Alpine Stables Inc. was established on April 1, 2014. The company provides stables, care for animals, and grounds for riding and showing horses. You have been hired as the new assistant controller. The following transactions for April 2014 are provided for your review:
a. Received contributions from five investors of $ 60,000 in cash ($ 12,000 each), a barn valued at $ 100,000, and land valued at $ 90,000. Each investor received 3,000 shares.
b. Built a small barn for $ 62,000. The company paid half the amount in cash on April 1, 2014, and signed a three- year note payable for the balance.
c. Provided animal care services to customers, all on credit, for $ 35,260.
d. Rented stables to customers who cared for their own animals, and received cash payment of $ 13,200.
e. Received from a customer $ 2,400 to board her horse in April, May, and June (record as deferred revenue).
f. Purchased hay and feed supplies on account for $ 3,180 to be used in the summer.
g. Paid $ 1,240 in cash for water utilities expense incurred in the month.
h. Paid $ 2,700 on trade payables for previous purchases.
i. Received $ 10,000 from customers on trade receivables.
j. Paid $ 6,000 in wages to employees who worked during the month. k. Purchased a one- year insurance policy for $ 3,600 at the end of the month.
l. Received an electric utility bill for $ 1,800 for usage in April; the bill will be paid in May.
m. Paid $ 500 cash dividend to each of the investors at the end of the month.
Required
1. Set up appropriate T- accounts. All accounts begin with zero balances.
2. Record in the T- accounts the effects of each transaction for Alpine Stables in April, referencing each transaction in the accounts with the transaction letter. Show the ending balances in the T- accounts.
3. Prepare a statement of earnings at the end of April 2014, as well as a classified statement of financial position as at April 30, 2014.
4. Write a short memo to the five owners, offering your opinion on the results of operations during the first month of business.
5. After three years in business, you are being evaluated for a promotion to chief financial officer. One measure is how efficiently you managed the assets of the business. The following data are available:
Compute the total asset turnover ratio and the return on assets for 2015 and 2016 and evaluate the results. Do you think you should be promoted? Why? Ignore interest on the long- term note related to (b).


$1.99
Sales1
Views98
Comments0
  • CreatedAugust 04, 2015
  • Files Included
Post your question
5000