Transaction

Date

Transaction Details

CASH

1-Oct-05

OWNER EQUITY: Fred purchased 1800 shares for $72000 and Bill Purchased
500 shares for $20000. A portion of it was used for legal services(72000+20000- $
91200=$800)

91,200.00

1-Nov-05

BANK LOAN: to purchase property

40,000.00

1-Nov-05

PROPERTY: used $40000 loan and $32000 company's money

-72,000.00

1-Nov-05

BUILDING DEMOLITION TO PREPARE FOR NEW BUILDING: Mr. Mahoney

agreed to clear the existing building for $7000 if he was allowed to retain the
stones from the demolition. If he was not allowed he would charge 9000. Since,
Fred was convinced he could not get a better price for the stones, he decided to
allow mr. Mahoney to retain the stones. therefore, the effective price of the
stones is $2000. The amount was agrred to be paid on May 31 2006.

31-Dec-05

FINANCING FROM SPORTS BOAT: Sports boats agreed to provide financing

for the building through a loan payable in 10 equal annual installments. The loan
carried interest rates of 10% payable from 1 April 2006 and the first installment $
was due on 31 March 2007. The first cheque was sent for $40000 and the rest
would be sent after the completion of the building

40,000.00

INVENTORY BOUGHT FROM SPORTS BOAT: 17 modelsat an average cost of

$9000 bought on credit.
GROSS MARGIN: Total Sales:-$112000 in cash+58000 trade in allowances+
$13600 credit sales (183600-112000-58000)-$153000(COGS)=$30600

112,000.00

TRADE IN BOATS SOLD

54,800.00

FRED'S COMPENSATION FOR USING HIS PRIVATE BOAT AS DISPLAY: Fred

would receive $40 for every new boat sold.

-680.00

31-Jan-06

HOLMES BROTHERS CONSTRUCTION PAYMENT 1(with company's money)

-40,000.00

28-Feb-06

HOLMES BROTHERS CONSTRUCTION PAYMENT 2(with Bank loan money)

-40,000.00

31-Mar-06

HOLMES BROTHERS CONSTRUCTION PAYMENT 3

-60,000.00

ADDITIONAL CHARGE OF MATERIAL

-2,400.00

30-Mar-06

LOAN REPAYMENT(repaid by cheque)

-42,000.00

31-Mar-06

ARCHITECT BILL

-2,600.00

1-Jan-06

31-Mar-06

FRED'S SALARY: The brothers agreed that they would each receive a salary of
$24000 per year at all times during which they were egaged in company's
business on full time basis. On 1 Nov 2005, Fred left his job to work for the
company on a full time basis. therefore the effective tenure for which he should
receive his salary is from Nov 2005 to March 2006, i.e., 5 months. Slary earned
per month= 24000/12=$2000, for 5 months= 5 x 2000=$10000

-10,000.00

TOTAL

68,320.00

BALANCE SHEET SIZE

OWNER EQUITY
72000
F

20000
I

-800

MARION BOATS INC

ACCOUNTING EQUATION ,31st MARCH,2006

ASSETS
BUILDING

LAND

72,000.00

7,000.00

INVENTORY

ACCOUNTS
RECEIVABLE

TRADE-IN
ALLOWANCE

STONES

2,000.00

40,000.00

40,000.00

60,000.00

2,400.00

2,600.00

153,000.00

-153,000.00

13,600.00 $

58,000.00

-58,000.00

145,000.00 $

79,000.00

13,600.00

239,600.00

Key
Cash from Mr Fred

Financing activity

Cash from Bill

Investing activity

Service fee for

lawyer

Op

Operating activity

2,000.00

LIABILITIES + EQUITY
OWNERS' EQUITY

ACCOUNT PAYABLE

BANK LOAN

BUILDING
DEMOLIOTION
PAYABLE

RETAINED
EARNINGS

91,200.00
$

40,000.00

9,000.00

SPORTS BOAT
LOAN

###

153,000.00

30,600.00

-3,200.00

-680.00

-40,000.00 $

-2,000.00

91,200.00

153,000.00 $

307,920.00

-10,000.00

14,720.00 $

9,000.00 $

40,000.00

ACTIVITY

F and Op (break
down given below)
F
I

OP

OP

OP

OP

I
I
I
I
F
I

OP

Balance sheet as of March 31, 2006

Current Assets
Cash
$
Accounts Recievables
$
Inventory
$
Trade in allowance
$
Non Current Assets
Stones
$
Building
$
Land
$
Total
$

68,320
13,600
-

Liabilities
Accounts Payable
Bank Loan
Sports boat loan
Site Preparation Payable
Owners equity
owners equity

2,000
145,000
retained Earnings
79,000
307,920 Total

$
$
$
$

153,000
40,000
9,000

91,200

14,720

307,920

Marion Boats, Inc

Income Statement
Sales of new boats
Credit sales
Trade in allowance
Net Revenue
Cost of goods sold
Gross Margin
Expenses
Sale of trade in goods
Freds salary
Fred's commision
Bank Interest
Total Expense
Net Income

$
$
$
$
$
$

112,000
13,600
58,000
183,600
153,000
30,600

$
$
$
$
$

3,200
10,000
680
2,000
15,880

14,720

Marion Boats, Inc

Cash Flow Statemet(Direct Method)
Cashflows from Operating Activities
Cash Inflows
Sale From Customers
Trade in goods

$
$

112,000.00
54,800.00

$
$
$
$
Total $

-10,000.00
-680.00
-800.00
-2,000.00
153,320.00

Cash Outflows
Fred's salary
Fred's compensation
Legal fees
Intrest paid

Cashflows form Investing Activities

Cash Outflows
Architect Fee
Material Cost
Property
Construction Payments

$
$
$
$
Total $

-2,600.00
-2,400.00
-72,000.00
-140,000.00
-217,000.00

Cashflows from Financing Activities

Cash Inflows
Cash from Fred
Cash from bill
Loan from Bank
Advance from sports boat

$
$
$
$

72,000.00
20,000.00
40,000.00
40,000.00

$
Total $

-40,000.00
132,000.00

68,320.00

Cash Outflows
bank loan repaid

Total Cash Balance

Fred and Bill's Equity

No of shares
Share Value

Total
2300
$ 14,720.00

Fred
1800
11,520.00

Bill
500
3,200.00