EXECUTIVE SUMMARY THE DATA SOFTWARE

Our analysis was performed entirely in Excel 2007.

ns, cash outflows and other related financial information; we prepared transaction journals, T-accounts, income statements, s

. gives detailed information about how the company was formed and the financial data of the year 2003. The expenditures, tr

ANALYSIS
Date Entry No. Accounts and Explanation Intengible Assets (patent) Cash Shareholder's Equity Establishmnet of Chemalite, Inc. Incorporation Expenses Cash Expenses like legal fees, charter costs...etc PP&E Cash Building the machinery Inventory Cash Purchasing Inventory

uestion asks to prepare a summary of the cash transactions for the six months ended June 30, 2003. The summary and the T-a Table 1. Cash transactions for the six months ended June 30, 2003

1/2/2003

1/15/2003

6/15/2003

6/24/2003

Table 2. T-accounts for the six months ended June 30, 2003
Assets Cash 1 $375,000 $7,500 $62,500 $75,000 $230,000 Intengible Assets 1 $125,000 $125,000 PP&E 3 $62,500 $62,500 Inventory 4 $75,000

$75,000

e second question asks to prepare an income statement for the six months ended June 30, 2003. The income statement is sho Table 3. The income statement for the six months ended June 30, 2003
Net Sales Cost of Sales Gross Profit Operating Expenses Operating Profit Profit before Tax Tax Net Income (Loss) $ $ $ ($7,500) ($7,500) ($7,500) $ ($7,500)

e, Inc. believes that the company lost $145,000 in six months. However, it is clear from the income statement which is present

The third question asks to prepare a statement of financial position at June 30, 2003 and a statement of cash flows Table 4. Statement of financial position at June 30, 2003
ASSETS Current Assets Cash Inventory Total Current Assets PP&E Intangible Assets TOTAL ASSETS SHAREHOLDERS' EQUITY AND LIABILITIES Current Liabilities Accounts Payable Total Current Liabilities Shareholders' Equity Capital Retained Earnings Total Shareholders' Equity TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES

Table 5. Statement of cash flows for the six-month period

OPERATING ACTIVITIES Net Income Depreciation and Amortization

Change in Account Receivable Change in Inventory Change in Current Liabilities Net Cash provided by Operating Activities INVESTING ACTIVITIES Purchase of equipment Net Cash used by Investing Activities FINANCING ACTIVITIES Net Cash provided by Financing Activities CASH and CASH EQUIVALENTS Cash balance on Jan 1, 2003 End of Period

e statement and a statement of cash flows for the year ended December 31, 2003. These statements and also the transaction Table 6. Transaction journal for the year ended December 31, 2003
Date Entry No. Accounts and Explanation Intengible Assets (patent) Cash Shareholder's Equity Establishment of Chemalite, Inc. Incorporation Expenses Cash Expenses like legal fees, charter costs...etc PP&E Cash Building the machinery Inventory Cash Purchasing Inventory Prototype Cash Purchase of protoype Cash Account Receivable Sales Sales to auto parts distributor Inventory Cash Purchasing additional inventory Advertising and Promotion (A&P) Expense Cash

1/2/2003

1/15/2003

6/15/2003

6/24/2003

7/1/2003

7-12/1/2003

7-12/1/2003

7-12/1/2003

7-12/1/2003

7-12/1/2003

7-12/1/2003

10

7-12/1/2003

11

7-12/1/2003

12

7-12/1/2003

13

7-12/1/2003

14

Television and trade journal advertising COGS Salaries, General and Administration (SGA) Cash Direct manufacturing labor and overhead PP&E Cash Purchase of machinery Interest Expense Cash Interest expense of loan COGS Inventory (250000-55000) Remaining Inventory Depreciation Expense (125000/5) Intengible Assets (patent) Depreciation expense of patent Depreciation Expense (150000/20) PP&E 6 month dep. of newly bought machine Assets Cash

Table 7. T-accounts for the year ended December 31, 2003

1 $375,000 6 $685,000

$7,500 $62,500 $75,000 $23,750 $175,000 $22,500 $430,000 $150,000 $750

$113,000 Intengible Assets 1 $125,000 $100,000 PP&E 3 $62,500 10 $150,000 $205,000 Inventory 4 $75,000 $195,000 $7,500 $25,000

7 $175,000 $55,000 Protoype 5 $23,750 $23,750 Accounts Receivable 6 $69,500 $69,500

Table 8. Income statement for the year ended December 31, 2003
Net Sales Cost of Sales Gross Profit SGA Incorporation Expenses A&P Depreciation Expenses Operating Profit Interest Expense Profit before Tax Tax Net Income (Profit) $754,500 ($545,000) $209,500 ($80,000) ($7,500) ($22,500) ($32,500) $67,000 ($750) $66,250 $ $66,250

Table 9. Statement of financial position at December 31, 2003

ASSETS Current Assets Cash Accounts Receivable Inventory Total Current Assets PP&E Prototype Intangible Assets TOTAL ASSETS

SHAREHOLDERS' EQUITY AND LIABILITIES Current Liabilities Accounts Payable Total Current Liabilities Shareholders' Equity Capital Retained Earnings Total Shareholders' Equity TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES

Table 10. Statement of cash flows for the year ended December 31, 2003
OPERATING ACTIVITIES Net Income Depreciation and Amortization Change in Account Receivable Change in Inventory Change in Current Liabilities Net Cash provided by Operating Activities INVESTING ACTIVITIES Purchase of equipment Prototype Purchase Net Cash used by Investing Activities FINANCING ACTIVITIES Net Cash provided by Financing Activities CASH and CASH EQUIVALENTS Cash balance on Jan 1, 2003 End of Period

ast question asks to prepare a report to stockholders on the financial position of Chemalite, Inc. for its first year, January 1, 20

Dear Stockholder; evenue in excess over the cost of the inventory sold. When we look at our income statement we see that the company genera ments to the business. Therefore the 145,000 decrease on cash balance is a misleading figure for the stockholders. The orders promising levels of net income and most of cash expenses were spent on the improvement of the business. In addition to the

unts, income statements, statements of financial position and statements of cash flows for the six months ended June 30, 200

2003. The expenditures, transactions and cash outflows are given in two halfs of the year 2003.

Excel 2007.

3. The summary and the T-accounts are shown in Table 1 and Table 2. 30, 2003
Debit $125,000 $375,000 Credit

$500,000 $7,500 $7,500 $62,500 $62,500 $75,000 $75,000

2 3 4

Liabilities and Shareholders' Equity Shareholder's Equity $500,000 $500,000

Expense and Revenue Accounts Incorporation Expenses 2 $7,500 $7,500

he income statement is shown in Table 3.

2003

statement which is presented above that the company only lost $7,500 during these six months.

d a statement of cash flows for the six-month period. These statements are shown in Table 4 and Table 5.

$230,000 $75,000 $305,000 $62,500 $125,000 $492,500

$ $

$500,000 ($7,500) $492,500 $492,500

riod
($7,500) -

$ $

($75,000) ($82,500)

($62,500) ($62,500)

$375,000 $230,000

s and also the transaction journal and T-accounts for the year ended December 31, 2003 are shown in Table 6, Table 7, Table

31, 2003
Debit $125,000 $375,000 Credit

$500,000 $7,500 $7,500 $62,500 $62,500 $75,000 $75,000 $23,750 $23,750 $685,000 $69,500 $754,500 $175,000 $175,000 $22,500 $22,500

$350,000 $80,000 $430,000 $150,000 $150,000 $750 $750 $195,000 $195,000 $25,000 $25,000 $7,500 $7,500

2003
Liabilities and Shareholders' Equity Shareholder's Equity $500,000 $500,000

2 3 4 5 7 8 9 10 11

Expense and Revenue Accounts Incorporation Expenses 2 $7,500 $7,500 Sales $754,500 $754,500 A&P Expense $22,500 $22,500 SGA $80,000 $80,000

13

8 14

9 12

COGS 9 $350,000 12 $195,000 $545,000 Interest Expense $750 $750

11

Depreciation Expense 13 $25,000 14 $7,500 $32,500

$113,000 $69,500 $55,000 $237,500 $205,000 $23,750 $100,000 $566,250

$ $

$500,000 $66,250 $566,250 $566,250

, 2003
$66,250 $32,500 ($69,500) ($55,000) ($25,750)

($212,500) ($23,750) ($236,250)

$375,000 $113,000

r its first year, January 1, 2003 to December 31, 2003. The report is presented below.

e that the company generated $66,250 in profits, therefore owners equity has increased by the same amount as a result of o he stockholders. The orders from the Olympic Games amounting for $90,000 will boost our cash inflow from operating activitie usiness. In addition to the successful growth of the company, Chemalites Inc. will operate in the upcoming year with a guaran