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UNIVERSITY OF ONTARIO INSTITUTE OF TECHNOLOGY BUSI 1130—Introductory Financial Accounting I Winter 2020 Face-to-face hand-in assignment #2 Submission Requirements  You must hand in your face-to-face submissions at the start of class. Late submissions will not be accepted.  Face-to-face assignments must be typed.  You must attempt to answer all questions, including any required calculations, in order to receive a passing grade.  YOU MUST WORK ON YOUR OWN. INSTANCES OF PLAIGARISM WILL BE TAKEN SERIOUSLY. Part I – Leon’s Financial Statements (found in Content folder): 1) Provide a description of Leon’s. Include the business environment along with stakeholders that are relevant to Leon’s. Leon’s is the largest furniture retailer in Canada. They have a network of furniture, appliances, electronics and mattress. Leon’s also runs 3 sperate e-commerce sites. The stakeholders include any employees working for Leon’s, those who have invested into the company and Leon’s suppliers. Delta Distribution centre and TransGlobal Service would also be a stakeholder. The business environment is a global environment.

2) What pages can you find Leon’s’ audited financial statements and what are the names of the financial statements? You can find financial Statements on page 28-32. The names of these financial statements are Consolidated statements of financial position, Income, Comprehensive income, Shareholders Equity and cash flows.

3) When in Leon’s’ year end? Leon’s year end is December 31

4) What were Leon’s’ sales for the period and what was their comprehensive income? Calculate the Profit Margin for 2017 and 2018

Sales: $ 2,241,437 for the year up until December 31 Comprehensive Income: $107,773 Profit Margin: 2017 (976,875/2,241,437 x 100 = 43.6%) 2018 (954,267/2,215,379 x 100 = 43%)

5) What are the total assets and liabilities for Leon’s? How much is current and how much is noncurrent? If you take total assets minus total liabilities what is the value and what does this number represent? Total Assets: $1,723, 572 Liabilities: $866,210 1,723,572 - 866,210 = 857,362 This number represents the owners equity

6) What accounting standard does Leon’s report under? Explain why Leon’s would be required to report under this standard. Leon reports under the international financial reporting standards. Leon’s would be required to do so as they are a business operating in Canada within North America.

Part II: Please complete the following question:

Q1: Below is a simplified balance sheet for Southern Inc. (Southern): Sout her nI nc. Bal anceSheet Mar ch31,2019 ASSETS Cur r ent Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Account sr ecei vabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I nvent or i es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ot hercur r entasset s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot alcur r entasset s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pr oper t yandequi pment ,net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ot herasset s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot alasset s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LI ABI LI TI ES Tot alcur r entl i abi l i t i es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Longt er ml i abi l i t i es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot all i abi l i t i es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SHAREHOLDERS’EQUI TY Commonshar es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ret ai nedear ni ngs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot alshar ehol der s’equi t y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot all i abi l i t i esandshar ehol der s’equi t y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 900 27, 700 33, 000 4, 800 66, 400 7, 200 24, 300 $97, 900 $53, 600 13, 500 67, 100 26, 000 4, 800 30, 800 $97, 900

Calculate the following on May 31, 2019 using Southern's balance sheet and a net income of $2,000. 1. working capital – 66,400- 53,600 = $12,800 2. Return on Assets 2,000/ 97,900 x 100 = 2.04% 3. Return on Equity 2,00/30,800 x 100 = 6.5%

Q2: You have been provided with the following alphabetical list of accounts for The Rock Ltd. for 2019. Use the information to prepare an income statement, statement of changes in equity, and statement of retained earnings the year ended December 31, 2019, and balance sheet or statement of financial position as of December 31, 2019. You should be able to figure out how to treat accounts that have names unfamiliar to you by applying your understanding of the financial statements learned in this chapter.

Accounts payable

10,000

Furniture

36,000

Accounts receivable

12,000

Inventory

9,000

Accumulated depreciation

4,000

Long term debt (non-current portion)

5,000

Cash

8,000

Prepaid rent

2,000

Charitable donations

500

Rent expense

1,000

Common shares

26,000

Retained earnings (Dec 31, 2018)

13,000

Cost of sales

2,000

Salary expense

5,000

Current portion long term debt

2,000

Salary payable

3,000

Customer deposits

1,000

Sales revenue

19,500

Depreciation expense

1,000

Supplies expense

2,000

Dividends

4,000

Utilities expense

1,000

TheRockLTD Bal anceSheet December31,2019 ASSETS Cur r ent Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Account sr ecei vabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I nvent or i es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ot hercur r entasset s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot alcur r entasset s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pr oper t yandequi pment ,net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ot herasset s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot alasset s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LI ABI LI TI ES Account sPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depr eci at i on. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot alCur r entl i abi l i t i es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SHAREHOLDERS’EQUI TY Commonshar es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8000 12, 00 33, 000 0 29, 000 0 36, 00 65, 000 $10, 000 4000 14, 000 26, 000

Ret ai nedear ni ngs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot alshar ehol der s’equi t y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot all i abi l i t i esandshar ehol der s’equi t y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13, 000 39, 000 $60, 000

TheRockLTD I ncomeSt at ement December31,2019

Sal esRevenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CostofSal es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 19, 500 2000

Expenses RentExpense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sal ar yExpense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Suppl i esExpense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1000 5000 2000

Ut i l i t i esExpense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot alExpenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NetI ncome. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1000 9000 $8500...