CPA CMA CFM CIA MCA General Manager Mohy

. CPA, CMA, CFM, CIA, MCA General Manager, Mohy Albagory, Member of AICPA, IMA, ESAA, EST.

MCA COURSE Training manger : Walid Abdel aziz

• • • • • • Selected business transactions of the company during 2004 are listed below. Jan. 1 Mohy , the owner , started the business by depositing $80, 000. Jan. 3 Purchased land for $52, 000 cash. May 28 Purchased shop supplies from ABC Co. , cost $1, 400 due in 30 days. July 1 Paid $360 for newspaper advertising to be run during July 2 Purchased radio advertising from KRAM to be aired August for $470, payable. within 30 days Aug. 15 Collected $4, 980 cash for repairs made to vehicles of Ahmed. Nov. 17 Purchased tools and equipment on account from Karem for $13, 800 due in 60 days and the useful life is 5 years. Nov. 18 Made a $6, 800 partial payment of its account payable. Nov. 20 Sold some of the tools at a price equal to their cost $1, 800, collectable within 30 days Nov. 23 Mohy, withdrew $3, 100 cash from the company for his personal use. Nov. 29 Mohy deposited $1, 000 in the business. Nov. 30 received $600 in partial collection of the account receivable from sale of tools. Nov. 30 Paid all employees’ wages for November $4, 900 Dec. 1 Purchased building for $36, 000 from Walid , paid $6, 000 and issued a note by the remaining and the useful life is 20 years Dec. 31 There are $400 supplies , was used in the business operations during the year Jan. 5 Billed from Ali co. , for $5400 for maintenance and repair services rendered Instructions : Applied the accounting cycle. , assume the co. uses the straight line method in the depreciation

Date 2004 Jan. Account Titles 1 Cash Debit 80, 000 Mohy, Capital Jan. 3 Land 80, 000 52, 000 Cash May July Aug. 28 1 2 15 Shop Supplies Accounts payable 52, 000 1, 400 Advertising expense Cash 360 Advertising expense Accounts payable 470 Cash 360 470 4, 980 Repair Service Revenue Nov. 17 18 20 23 29 30 4, 980 Tools and Equipment Accounts payable 13, 800 Accounts payable Cash 6, 800 Accounts receivable Tools and equipment 1, 800 Mohy, Drawing Cash 3, 100 Cash Mohy, Capital 1, 000 Cash 13, 800 6, 800 1, 800 3, 100 1, 000 600 account receivable Nov. Dec. 30 30 1 Credit 600 Wages expense Cash 4, 900 Accounts Receivable Repair service revenue 5, 400 Building Cash Notes payable 36, 000 4, 900 5, 400 6, 000 30, 000

Cash 1/1 80, 000 8/15 4, 980 11/29 1, 000 11/30 600 3/1 52, 000 11/18 6, 800 7/1 360 11/23 3, 100 11/31 4, 900 12/1 6, 000 Accounts Receivable 11/20 11/31 Tools & Equipment 13, 800 6/25 Balance 6, 600 Balance 13, 420 11/17 1, 800 5, 400 11/20 1, 800 Accounts Payable 11/18 6, 800 5/28 7/2 11/17 1, 400 470 13, 800 Balance 12, 000 Balance 8, 870 600

Shop supplies 5/28 Repair service revenue 1, 400 8/15 11/30 4, 980 5, 400 Balance 10, 380 Balance 1, 400 Advertising expense 7/1 7/2 360 470 Balance 830 Mohy, drawing 12/1 3, 100 Balance 3, 100

Wages expense Mohy, capital 1/1 11/29 80, 000 1, 000 Balance 81, 000 11/30 Land 1/3 4, 900 Balance 4, 900 52, 000 Balance 52. 000 Notes payable 21/1 30, 000 Balance 30, 000 Building 12/1 36, 000 Balance 36, 000

Account Titles Cash Debit balance Credit balance $ 13, 420 Accounts Receivable (A/R) 6, 600 Shop Supplies Land 1, 400 52, 000 Building 36, 000 Tools and Equipment 12, 000 Notes Payable (N/P) $ 30, 000 Accounts Payable (A/P) 8, 870 Mohy, Capital Mohy, drawing Repair service revenue Advertising expense Wages expense 81, 000 3, 100 10, 380 830 4, 900 Total Balances $ 130, 250

Dec. 31 31 31 Shop Supplies Expense Shop Supplies 400 Depreciation Expense: Building Accumulated Depreciation: Building 150 Depreciation Expense: Tools& Equipment Accumulated Depreciation: Tools& Equipment 200 400 150 200

Accounts Trail balance Debit Credit Adjustments Debit Credit Adjusted trail balance Debit Cash 13, 420 Accounts Receivable 6, 600 Shop Supplies 1, 400 Land 52, 000 Building 36, 000 Tools and Equipment 12, 000 400 Credit 1, 000 Notes Payable (N/P) 30, 000 Accounts Payable (A/P) 8, 870 Mohy, Capital 81, 000 Mphee, drawing 3, 100 Repair service revenue 3, 100 10, 380 Advertising expense Wages expense 10, 380 830 4, 900 Supplies expense 400 Depreciation Expense: Building 150 Depreciation Expense: Tools & Equip 200 Accumulated Depreciation: Building 150 Accumulated Depreciation: Tools & Equip. 200 Total 130, 250 750 130, 600

The name of the business Mohy Co. The title of the statement Income Statement The date For the Year Ended December 31, 2004 Revenue : Repair Service Revenue 10, 380 Expenses : Advertising expense Wages expense Supplies expense Depreciation expense : Building Depreciation expense : Tools & Equipment Total expense Net income 830 4, 900 400 150 200 (6, 480) 3, 900

Mohy Co. Statement of Owner’s Equity For the Year Ended December 31, 2004 Mohy, Capital January 1, 2004 80, 000 Add : Net income 3, 900 Additional investment by the owner 1, 000 Less : Withdrawals by the owner ( 3, 100 ) Mohy, Capital, Dec. , 31, 2004. 81, 800 Mohy Co. Balance Sheet December 31, 2004 Assets Liabilities & Owner’s equity Liabilities Cash 13, 420 Accounts payable 8, 870 Accounts Receivable 6, 600 Notes payable 30, 000 Shop Supplies 1, 000 Total Liabilities 38, 870 Land 52, 000 Buildings 36, 000 (-) Accumulated Depreciation (150) Owner’s equity 35, 850 Equipment & Tools (-) Accumulated Depreciation Mohy, Capital 81, 800 12, 000 (200) 11, 800 120, 670

1 - Close to Revenues 2 - Close to Expenses Repair service revenue 10, 380 Income Summary 6, 480 Shop supplies expense Wages expense Advertising expense Depreciation Expense : Building 400 4, 900 830 150 Depreciation Expense: Tools & Equipment 3 - Close to Income summary 4 - Close to Withdrawing Income Summary 3, 900 Mohy, Capital Mohy, Withdrawals 3, 900 3, 100 200

Account Titles Cash Debit balance Credit balance $ 13, 420 Accounts Receivable (A/R) 6, 600 Shop Supplies Land 1, 000 52, 000 Building 36, 000 Tools and Equipment 12, 000 150 200 $ 30, 000 Accumulated Depreciation: Building Accumulated Depreciation: Tools & Equipment Notes Payable (N/P) Accounts Payable (A/P) 8, 870 Mohy, Capital 81, 800 Total Balances $ 121, 020

Mohy Co. Opening Balance Sheet January 1, 2005 Assets Liabilities & Owner’s equity Liabilities Cash 13, 420 Accounts payable 8, 870 Accounts Receivable 6, 600 Notes payable 30, 000 Shop Supplies 1, 000 Total Liabilities 38, 870 Land 52, 000 Buildings (-) Accumulated Depreciation 36, 000 Owner’s equity (150) 35, 850 Equipment & Tools (-) Accumulated Depreciation Mohy, Capital 81, 800 12, 000 (200) 11, 800 120, 670

Selected business transactions of the company during 2005 are listed below. March 26 Purchased shop supplies from Ahram Co. , cost $800 cash. May. 31 Paid all employees’ wages for May $4, 900 October 1 Purchased for $3000 a 30 months insurance policy. Nov. 25 Collected $100 cash for repairs made to Maher center. Dec. 31 There are $1, 500 supplies , was on hand. Instructions : Applied the accounting cycle. Date Account Titles 2005 March 26 May 31 Oct. Nov. 1 25 Shop Supplies Cash Debit 800 Wages Expense Cash 4, 900 Unexpired Insurance Cash 3000 Cash 100 Repair Service Revenue Credit 4, 900 3000 100

Account Titles Cash Debit balance Credit balance $ 4, 820 Accounts Receivable (A/R) 6, 600 Shop Supplies Land 1, 800 52, 000 Building 36, 000 Tools and Equipment 12, 000 Notes Payable (N/P) $ 30, 000 Accounts Payable (A/P) 8, 870 Mohy, Capital Accumulated Depreciation: Building Accumulated Depreciation: Tools & Equipment Unexpired insurance Repair service revenue Wages expense 81, 800 150 200 Total Balances 3. 000 100 4, 900 $ 121, 120

Dec. 31 31 Shop Supplies Expense Shop Supplies 300 Insurance Expense Unexpired Insurance 300 Depreciation Expense: Building Accumulated Depreciation: Building 1800 Depreciation Expense: Tools& Equipment Accumulated Depreciation: Tools& Equipment 2400 300 1800 2400

Accounts Trail balance Debit Adjustments Credit Debit Credit Adjusted trail balance Debit Cash 4, 820 Accounts Receivable 6, 600 Shop Supplies 1, 800 Land 52, 000 Building 36, 000 Tools and Equipment 12, 000 300 Credit 1, 500 Notes Payable (N/P) 30, 000 Accounts Payable (A/P) 8, 870 Mohy, Capital 81, 800 100 Repair service revenue Wages expense 4, 900 Unexpired insurance 3, 000 4, 900 300 2, 700 Supplies expense 300 Depreciation Expense: Building 1800 Depreciation Expense: Tools & Equip 2400 Accumulated Depreciation: Building 150 1800 1950 Accumulated Depreciation: Tools & Equip. 200 2400 2600 Insurance expense Total 300 121, 120 4800 300 4800 125320

The name of the business Mohy Co. The title of the statement Income Statement The date For the Year Ended December 31, 2005 Revenue : Repair Service Revenue 100 Expenses : Wages expense Supplies expense Insurance expense 4, 900 300 Depreciation expense : Building Depreciation expense : Tools & Equipment 1800 2400 Total expense (9700) Net income (9600) Mohy Co. Statement of Owner’s Equity For the Year Ended December 31, 2005 Mohy, Capital January 1, 2005 81, 800 Less : Net loss (9600) Mohy, Capital, Dec. , 31, 2005 72200

Mohy Co. Balance Sheet December 31, 2005 Assets liabilities & owner equity Liabilities Cash 4, 820 Accounts payable 8, 870 Accounts Receivable 6, 600 Notes payable 30, 000 Shop Supplies 1, 500 Total Liabilities 38, 870 Land 52, 000 Buildings 36, 000 (-) Accumulated Depreciation (1950) Owner’s equity 34, 050 Equipment & Tools (-) Accumulated Depreciation Unexpired insurance Mohy, Capital 72, 200 12, 000 (2600) 9, 400 2, 700 111, 070

Close to Revenues 1 Repair service revenue 100 Income Summary 100 2 - Close to Expenses Income Summary 9, 700 Supplies expense Wages expense Insurance expense Depreciation Expense : Building Depreciation Expense : Tools & Equipment 3 - Close to Income summary Mohy, Capital 9, 700 Income Summary 9, 700 300 4, 900 300 1800 2400

Account Titles Cash Debit balance Credit balance $ 4, 820 Accounts Receivable (A/R) 6, 600 Shop Supplies Land 1, 500 52, 000 Building 36, 000 Tools and Equipment 12, 000 Accumulated Depreciation: Building Accumulated Depreciation: Tools & Equipment Notes Payable (N/P) 1950 2600 $ 30, 000 Accounts Payable (A/P) 8, 870 Mohy, Capital Unexpired insurance 72, 200 Total Balances 2, 700 $ 111, 070

Cash flow statement Operating: Cash received from customer Cash paid for advertising Cash paid for wages Net cash used by operating activities Investing: Cash paid for purchased building Cash paid for purchased land Cash paid for purchased tools Cash received from sale of tools Net cash used by investing activities 4, 980 (360) (4, 900) (280) (6000) (52, 000) (6, 800) 600 Financing: Cash received from the owners 80, 000 Additional paid in capital 1, 000 Withdrawals (3, 100) Net cash provided by financing activities Net change in cash: 13420 + Beginning cash 0 = Ending cash 13420 (64200) 77, 900

Liquidity ratios Debt Mgt. ratios Asset Mgt. ratios Profitability ratios Assume: 1 - Net sales = $10, 380 2 - Ending Inventory =$ 1, 000 3 -Average net receivable 2, 500 4 - Net credit sales = 5, 000 5 - Average inventory =$1, 500 6 - Cost of Goods Sold = $8, 000 7 - Purchases = $6, 000 A- Current ratio: Current Liabilities ÷ Current assets = 4, 820 + 6, 600 + 1, 500 ÷ 38, 870 = 0. 33 times B- Quick (Acid -Test) ratio: Current assets- (Inventory + Prepaid expense) = 12, 920 – (1, 000 +2, 700) Current Liabilities 38, 870 C-Receivable turnover: Net credit sales = 5, 000 = 2 times Average net receivable 2, 500 D- Inventory turnover: Cost of good sold = 8, 000 = 5. 3 times Average inventory 1, 500 = 0. 23 times

h A- Days sales outstanding DSO: Days sales outstanding (Average Collection period) = 365 =182. 5 days Receivable turnover 2 B – Average days inventory on hand : = 365 = 69 days Inventory turnover 5. 3 C- Total assets turnover: = Net sales Total assets A- Debt ratio = 10, 380 = 0. 09 times 114, 920 = (Liabilities Total debt ) = 38, 870 * 100 = 33. 8 % Total assets 114, 920 [ B- Debt to equity ratio = ( Liabilities Total debt ) = 38, 870 Total equity 76, 050 = 0. 51 times

A- Gross profit margin : = Net income * 100 = ( 5, 750 ) * 100 = 55. 39 % Net sales 10, 380 B- Total assets turnover : = Net sales = 10, 380 = 0. 08 times Average total assets (114, 920 +120, 670 ) / 2 C- Rate of return on assets : = Net income = (5, 750 ) * 100 = 4. 88 % Average total assets (114, 920 +120, 670 ) / 2 D- Rate of return on assets : = Net income Average total equity = (5, 750 ) * 100 = 7. 2 % (81, 800 + 76, 050 ) / 2