Landscaping Smart Inc. is a well reputable company providing landscaping services to Canadian customers since 1995. Its
Question:
Landscaping Smart Inc. is a well reputable company providing landscaping services to Canadian customers since 1995. Its owner, Sonny Smooth hired you as a Controller to help him compile financial reports as he would like to apply for a loan. He had an accountant Johny Lo, who did reports and who just recently retired but worked for Sonny since the company started operating 25 years ago. Sonny has never had time to learn accounting and was constantly relying on his loyal employee.
Because Landscaping Smart had been doing well for so long, Sonny decided to expand his business. He was impressed with your credentials and work experience and believed that you are the best candidate for this job. Since he never prepared financial statements and his accountant just retired, he asked you to help him in his application project for a bank loan.
On your first day at work, you printed a list of accounts as of December 31, 2019 (see below) and started working on a preparation of financial statements.
Supplies | $2,000 |
Equipment | 11,000 |
Common Shares | 15,000 |
Property Tax Expense | 2,000 |
Accounts Receivable | 25,000 |
Cash | 8,000 |
Dividends | 30,000 |
Building | 126,000 |
Beginning Retained Earnings | 60,000 |
Land | 8,000 |
Service Revenue | 150,000 |
Salary Expense | 40,000 |
Rent Expense | 15,000 |
Note Payable | 32,000 |
Interest Payable | 2,000 |
Utility Expense | 3,000 |
Accounts Payable | 15,000 |
Interest Expense | 4,000 |
Requirements:
- Prepare the income statement of Landscaping Smart Inc. for the year ended December 31, 2019.
- Prepare the company’s statement of retained earnings for the fiscal year.
- Prepare the company’s balance sheet at December 31, 2019.
- As Controller of Landscaping Smart Inc. answer the following questions and then decide if you would be pleased with Landscaping Smart’s overall performance in 2019.
- Was Landscaping Smart profitable during 2019 and by how much?
- Did retained earnings increase or decrease and by how much?
- Which is greater: total liabilities or total equity?
- Who owns more of Landscaping Smart’s assets: creditors or Landscaping Smart’s shareholders?
Write a brief report to Bank of Montreal communicating financial and nonfinancial information and why the bank should lend money to Landscaping Smart Inc.
Expert Answer:
Income Statement of Landscaping Smart Inc for the year ended December 31 2019 Revenue Service Revenue 150000 Expenses Salary Expense 40000 Rent Expens... View the full answer
