Accounting Help

NEED BEFORE MIDNIGHT 12/10/19 CST

1) Using Trap   Adventures, Inc.’s income statement, evaluate the operations for the month of   December.  Complete a common-size income statement using sales as the base number.
What is the largest percentage?
What is the smallest percentage?
What recommendations could be made to increase Trap’s net income?

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2) Currently, Trap Adventures, Inc. does not own any loans or bank notes   (long-term liabilities).
What would happen if Trap decides to obtain a bank loan for $25,000 to fund daily operations?
How would this transaction impact the financial statements – which accounts would be affected?
What is the debt to equity ratio?
What does the debt to equity ratio represent?

Journal Entries

Dec 1 Cash 60000
Common Stock 60000
2 Prepaid Rent 18000
Cash 18000
2 Office Equipment 17500
Cash 17500
3 Office Supplies 1500
Accounts Payable 1500
10 Prepaid Insurance 3600
Cash 3600
14 Salaray Expense 10750 10750
Cash
24 Cash 54000
Commission Revenue 54000
28 Salaray Expense 12125
Cash 12125
29 Repair Expense 350
Cash 350
30 Telephone Expense 450
Cash 450
30 Dividends 3000
Cash 3000
181275 181275

Unadjusted Trial Balance

Trap Adventures, Inc.
Unadjusted Trial Balance
December 31, 2015
Cash $ 48,225
Prepaid Rent 18,000
Prepaid Insurance 3,600
Office Supplies 1,500
Office Equipment 17,500
Accounts Payable $ 1,500
Common Stock 60,000
Dividends 3,000
Commission Revenue 54,000
Salary Expense 22,875
Repair Expense 350
Telephone Expense 450
Totals $ 115,500 $ 115,500

Adjusting Entries

Dec 31 Insurance Expense 300
Prepaid Expense 300
31 Rent Expense 3000
Prepaid Rent 3000
31 Office Supplies Expense 900
Office Supplies 900
31 Depreciation Expense 325
Accumulated Depreciation 325
31 Salary Expense 525
Salary Payable 525

Adjusted Trial Balance

Trap Adventures, Inc.
Adjusted Trial Balance
December 31, 2015
Cash $ 48,225
Prepaid Rent 15,000
Prepaid Insurance 3,300
Office Supplies 600
Office Equipment 17,500
Accumulated Depreciation 325
Accounts Payable $ 1,500
Salary Payable $ 525
Common Stock 60,000
Dividends 3,000
Commission Revenue 54,000
Salary Expense 23,400
Repair Expense 350
Telephone Expense 300
Insurance Expense 450
Rent Expense 3,000
Office Supplie Expense 900
Depreciation Expense 325
Totals $ 116,350 $ 116,350

Financial Statements

Trap Adventures, Inc. NOTE that there are THREE Statements included on this sheet.
Income Statement
For the year ended December 31, 2015
Revenues:
Commissions Revenue $ 60,000.00
Expenses:
Salary Expense $ 23,400.00
Repair Expense 350
Telephone Expense 450
Insurance Expense 300
Rent Expense 3000
Office Supplies Expense 900
Depreciation Expense 325
Total Expenses 28,725
Net Income $ 31,275
Trap Adventures, Inc.
Statement of Stockholder’s Equity
For the year ended December 31, 2015
Common Stock Retained Earnings Totral Stockholder’s Equity
Beginning Balance, December 1, 2015 $ – 0 $ – 0 $ – 0
Add issuance of common stock 60,000 60,000
Add net income 31,275 31,275
Less dividends (3,000) (3,000)
Ending Balance, December 31, 2015 $ 60,000 $ 28,275 $ 88,275
Trap Adventures, Inc.
Balance Sheet
December 31, 2015
Assets Liabilities
Current Assets: Current Liabilities:
Cash $ 48,225 Accounts Payable $ 1,500
Prepaid Rent 15,000 Salary Payable 525
Prepaid Insurance 3,300 Total Current Liabilities $ 2,025
Ofiice Supplies 600
Total Current Assets $ 67,125
Long-term Assets:
Office Equipment $ 17,500
Less Accumulated Depreciation (325) Stockholder’s Equity
Total Long-term Assets $ 17,175 Common Stock $ 60,000
Retained Earnings 28,275
Total Stockholder’s Equity 88,275
Total Assets $ 84,300 Total Liabilities and Stockholder’s Equity $ 90,300

Closing Entries

Dec 31 Retained Earnings 28725
Salary Expense 23400
Repair Expense 350
Telepohone Expense 450
Insurance Expense 300
Rent Expense 3000
Office Supplies Expense 900
Depreciation Expense 325
31 Commission Revenue 54000
Retained Earnings 54000
31 Retained Earnings 3000
Dividends 3000

Post-Closing Trial Balance

Trap Adventures, Inc.
Post-Closing Trial Balance
December 31, 2015
Cash $ 48,225
Prepaid Rent 15,000
Prepaid Insurance 3,300
Office Supplies 600
Office Equipment 17,500
Accumulated Depreciation $ 325
Accounts Payable $ 1,500
Salary Expense 525
Common Stock $ 60,000
Retained Earnings 22,275
$ 84,625 $ 84,625

Writing Portion

NOTE that this tab should be used for the writing portion of the Unit 5 IP Assignment.
Answer two of the questions below in 1-2 fully developed paragraphs.  A fully developed paragraph should have a major point with 3 to 5 support sentences. One or two sentences is not acceptable or does not discuss the question. Be sure to show what you know!!!
1. Trap Adventures, Inc. is looking for an accountant.  In your own words, explain to Trap’s hiring team the role of accountant and accounting within business.
Provide examples of the expectations of the accountant.
2. Discuss the financial position of Trap Adventures, Inc using the following ratios:
Current ratio
Return on equity
For each ratio, provide the calculation and an explanation of the meaning.
Is this a positive or negative result for the Trap Adventures, Inc.?
3. Using Trap Adventures, Inc.’s income statement, evaluate the operations for the month of December.  Complete a common-size income statement using sales as the base number.
What is the largest percentage?
What is the smallest percentage?
What recommendations could be made to increase Trap’s net income?
4. Currently, Trap Adventures, Inc. does not own any loans or bank notes (long-term liabilities).
What would happen if Trap decides to obtain a bank loan for $25,000 to fund daily operations?
How would this transaction impact the financial statements – which accounts would be affected?
What is the debt to equity ratio?
What does the debt to equity ratio represent?