Accounting help

Task 1:Laura Prebble, the owner-manager of a small business, had carefully monitored her cash position over the past financial year, and was pleased to note at the end of the year that the cash position was strong, and had shown a healthy 50% increase over the year. When presented with the income statement for the year, she was dismayed to note that the profit earned in the last year had deteriorated significantly and had become a loss for the current period. In her anger, she accuses you of having made errors in the accounting since ‘such a silly situation could not possibly exist’. ( Required Draft a response to Laura) The financial statements for the business of Trinh’s Nail Supplies for the past two years are presented below. Task 2: Sunrise Ltd completed the following transactions during a given year: Transaction Ratio   1. Sold obsolete inventory at cost   Profit margin 2 Redeemed debentures by issuing ordinary shares Return on ordinary equity   3. Issued a share dividend on ordinary shares   Earnings per share 4. Declared a cash dividend on ordinary shares   Dividend payout 5. Paid the GST owing to the tax office Dividend yield   6. Purchased inventory on credit   Quick ratio 7. Sold inventory for cash   Current ratio 8. Wrote off a bad debt against Allowance for Doubtful Debts   Current ratio 9. Collected an account receivable Receivables turnover 10. Sold inventory on credit Inventory turnover 11. Issued additional ordinary shares for cash Debt ratio 12. Paid trade accounts payable Return on assets Required State and discuss whether each transaction would cause the ratio listed with the transaction to increase, decrease or remain unchanged.
Task 3:The financial statements for the business of Trinh’s Nail Supplies for the past two years are presented below. TRINH’S NAIL SUPPLIES Comparative Income Statements for the year ended 30 June 2016 2017 Sales $ 400  000 $ 500  000 Cost of sales 350  000 458  000 GROSS PROFIT 50  000 42  000 Interest income 1  000 2  000 Loss on sale of fixtures — 800 51  000 43  200 Office supplies used 10  000 11  000 Other expenses 29  000 29  000 39  000 42  000 Profit $ 12  000 $ 3  200 TRINH’S NAIL SUPPLIES Comparative Statements of Financial Position as at 30 June 2016 2017 ASSETS Cash at bank $ 4  400 — Accounts receivable 42  000 $ 60  000 Inventory 80  000 40  000 Office supplies 2  000 5  000 Freehold property 60  000 80  000 Fixtures 40  000 46  000 Accumulated depreciation – fixtures (16  000) (20  200) Investments 6  000 16  000 $ 218  400 $ 226  800 LIABILITIES AND EQUITY Bank overdraft — $ 4  000 Accounts payable $ 26  000 40  000 Trinh, Capital 192  400 182  800
$ 218  400 $ 226  800
Additional information a. All purchases and sales of inventories are on credit. All purchases of office supplies are for cash. b. The bank overdraft is considered to be part of the entity’s cash management function. c. During the year ended 30 June 2017, the owner, Trinh, withdrew $12  800 in cash for personal use. d. The entity sold some fixtures for $1200 cash during the current year. These fixtures initially cost $4200 and had been written down to a carrying amount at the date of sale of $2000. e. Depreciation of fixtures has been included in ‘other expenses’ for the year ended 30 June 2017. All remaining other expenses were paid in cash. Required 1. Prepare the statement of cash flows for Trinh’s Nail Supplies for the year ended 30 June 2017, using the direct method. 2. Comment on the cash flow position of the entity as shown in the statement of cash flows.