Solution-Prepare the trial balance of the business firm

Prepare the trial balance of the business firm

Reference no: EM13833240

Gilligan Island Inc., provides tropical vacations. The company sells vacations 30 days in advance. Your boss has no idea of the financial condition for some time and, therefore, is asking you to help with a more current assessment of the company's position for his/her meeting with the CEO.

Below you will find a series of accounts that represent the trial balance of the business firm. These accounts encompass both income statement and balance sheet accounts.

	2009	2010	2011
Accumulated depreciation	176,580	209,050	242,725
Retained earrings	337,602	510,731	648,528
Sales	3,702,480	3,961,654	3,981,462
Cash	35,750	62,635	86,595
Bonds payable	421,000	334,000	325,000
Accounts receivable	246,580	293,430	349,182
Depreciation expense	31,265	32,470	33,675
Common stock shares outstanding	80,000	80,000	80,000
Plant and equipment, at cost	984,021	1,026,880	1,151,210
Taxes	79,484	93223	74,198
Accounts payable	62,685	116,696	188,569
Common stock, $1 par	75,000	75,000	75,000
Inventory	185,652	243,117	312,622
Prepaid expenses	6,575	21,525	26,325
Cost of goods sold	2,665,786	2,879,049	2,936,630
Interest expense	12,532	10,325	10,235
Selling and administrative expenses	765,800	773,458	788,927
Marketable securities	12,545	23,564	24,153
Other current liabilities	123,256	150,674	195,265
Capital paid in excess of par (common)	275,000	275,000	275,000

Required: Prepare (using Excel) a proper form income statement and balance sheet for the company. Make sure to create a proper form statement. Make sure you include these statements in your PowerPoint with speaking notes.

Based on the financial statements that were prepared with this data, complete the following financial ratio calculations and provide a narrative discussion of these results as compared to industry averages (provided.)

Ratios required:

Ratio	Industry Average
1. Profit margin	3.2%
2. Return on assets (use ending assets)	6.0%
3. Return on common equity (use ending common equity)	15.6%
4. Receivable turnover (use ending receivables)	8.5 x
5. Inventory turnover (use ending inventory)	12.0 x
6. Fixed asset turnover (use ending fixed asset balance)	5.75 x
7. Total asset turnover (use ending assets)	1.89 x
8. Current ratio	3.10
9. Quick ratio	1.40
10. Debt to total assets (use ending assets)	37.0%

Your solution should include the required ratios for each year and then provide speaking notes regarding the results as they compare to the industry averages. This analysis should discuss whether or not company is better or worse than the industry average but it should not stop there. You should also include a speaking notes as to why or how the difference can be explained, i.e., the reason for the variance. The final slide is to be providing a recommendation to improve the finances of the company

Reference no: EM13833240

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Prepare the trial balance of the business firm

Reference no: EM13833240

Reference no: EM13833240

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