Reference no: EM13845868

You are an accountant for Donovan Co.

• Prepare (a) a single-step income statement, (b) a statement of owner's equity, and (c) a balance sheet in report form from the following data for Donovan Co., taken from the ledger before adjustment on December 31, 2007 [the end of their fiscal year].Make any necessary Adjusting Entries. You may create AJE's and an Adjusted Trial Balance, but they do not need to be included on your .xls product.
• Also state the (d) Quick Ratio for 2007.The Quick Ratio for 2005 and 2006 were determined to be 1.95 and 1.93 respectively. In 2007 by comparison, is your company Improving or Declining?
• The CFO has bet you that the income he projected last year was exactly correct - a net profit of precisely $97,000. (e) Is he right?
• Note that Donovan Company has traditionally included expenses such as Depreciation Expense and Supplies Expense in an account simply called "Administrative Expenses".

The following unadjusted balances were available:

Accounts Payable	$  47,200
Accounts Receivable	64,300
Accumulated Depreciation - Office Equipment22750	22,250
Accumulated Depreciation - Store Equipment	62,100
Administrative Expenses75500	74,000
Al Donovan, Capital	141,750
Cash	39,700
Cost of Merchandise Sold	545,000
Al Donovan, Drawing	42,000
Interest Expense	9,000
Merchandise Inventory	93,250
Note Payable, Due 2008	50,000
Office Equipment	49,750
Prepaid Insurance	6,500
Rent Revenue	7,500
Salaries Payable	3,700
Sales (net)	820,500
Selling Expenses	101,500
Store Equipment	125,000
Office Supplies on Hand Jan 1, 20074000	5,000

 

 

 

Office Equipment was purchased in 2005 and Depreciated $500 in 2007.
Store Equipment was bought in 2004 and was Fully Depreciated under Sec 179 in that year.
A count of Office Supplies on Dec. 31, 2007 indicated that only $4000 of supplies remained on hand.