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Assignment #3 Backyard Technology Inc. (BTI) is a Sherbrooke retailer that sells commercial greenhouse kits. We are on March 2 and you are preparing the monthly financial statements for February 2021. Feb General information: · greenhouses are purchased from a local manufacturer that delivers the same day · there are no particular credit terms with suppliers, except that they must be paid within 30 days · BTI had 12 greenhouses on hand on February 1 at a unit cost of $11,800 · BTI uses the weighted average method to account for its inventory and cost of goods sold · BTI always mentions “FOB destination” when it ships goods to its customers · the selling price for a greenhouse is fixed at $21,000 · customers are offered 2/10 n/30 credit terms, counting from the date of the sale · past experience shows that 2% of A/R past due between 0-30 days are uncollectible; the percentage is 8% for A/R past due between 31-60 days and 25% for A/R past due for more than 60 days. · assume that no sales tax applies Transactions of the month: Feb 2: BTI purchased 25 greenhouses from Supplier X at the cost of $12,000 each Feb 3: it received a check from Customer A to fully pay its due Feb 6: it sold 4 greenhouses to Customer D and delivered them on February 9 (credit sale) Feb 8: it paid accounts payable that were due on January 31 as well as the amount due to Supplier X Feb 9: it sold 15 greenhouses to Customer E and delivered them on February 11 Feb 10: it purchased 45 additional greenhouses from Supplier X at the cost of $12,100 each Feb 19: it received a check from Customer D to fully pay its due Feb 26: it sold four greenhouses to Customer F and delivered them on March 6 (credit sale) Feb 28: it received a check from Customer E to fully pay its due Here is the Trial balance as at February 1, 2021: Cash1,200,000 Accounts receivable 126,000 Allowance for doubtful accounts 5,040 Inventory 141,600 Accounts payable 98,200 Common shares 100,000 Retained earnings1,264,360 A/R Ledger and Aging Schedule as at January 31, 2021 Customer Balance 0-30 days (2%) 31-60 days (8%) +60 days (25%) A B C 21,000 42,000 63,000 21,000 63,000 42,000 Total A/R 126,000 84,000 42,000 -0- AFDA 5,040 1,680 3,360 -0- Requested: · Update the A/R Ledger and aging schedule as at February 28, 2021 · Provide the schedule for Inventory · Record the transactions in the accounts, including closing · Provide the Trial balance (before and after closing) · Provide the monthly financial statements These tables are likely to be useful: Purchase Sale Inventory Date Units Total cost units Total cost Balance Units Average cost Feb 1 141,600.00 12 11,800.00 Cash Accounts receivable AFDA Inventory Accounts payable 1,200,000 126,000 5,040 141,600 98,200 Common shares Retained earnings Sales revenue COGS Bad debt expense 100,000 1,264,360 Trial balance as at February 28, 2021 Accounts Before closing After closing Cash Accounts receivable Allowance for doubtful accounts Inventory Accounts payable Common shares Retained earnings Sales revenue COGS Bad debt expense ASSIGNMENT #4 – BAC 121Students : The task is to prepare the financial analysis of Canadian Tire for year 2020. You could probably find such analysis on the Web, but my marking sheet focuses on what is required in these two pages only. Part I – Common size analysis Even though financial statements are more detailed, please consider only the following accounts. Statement of income 2020 2019 Revenue 100% 14,534.4 100% Cost of producing revenue 9,660.6 66.5% Gross margin 4,873.8 33.5% Other expense (income) (13.4) -0.2% SG&A expense 3,437.5 23.7% Net finance costs 266.8 1.8% Income taxes 288.1 2.0% Net income 894.8 6.2% Statement of financial position 2020 2019 Total assets 100% 19,518.3 100% Current assets 9,555.3 49.0% Non-current assets 9,963.0 51.0% Assets 2020 2019 Total assets 100% 19,518.3 100% Cash and cash equivalents 205.5 1.1% Trade and other receivables 938.3 4.8% Merchandise inventories 2,212.9 11.3% Prepaid expenses and deposits 139.3 0.7% Property and equipment 4,283.3 21.9% Statement of financial position 2020 2019 Total liabilities + equity 100% 19,518.3 100% Current liabilities 5,751.4 29.5% Non-current liabilities 8,262.2 42.3% Total liabilities 14,013.6 71.8% Equity 5,504.7 28.2% I prefer that you don’t go further in analyzing liabilities. Canadian Tire’s liabilities are complex and most of the items are unknown to you. Part II – Ratio Analysis Show your calculation for 2020 2020 2019 Gross profit margin 33.5% Profit margin 6.2% Interest coverage 5.4 times Debt to assets 71.8% Current ratio 1.7 times Return on assets 4.9% Return on equity 16.4% # days in receivables 23.5 days # days in inventories 79.5 days Part III – Interpretation Answer the following questions using the information you have gathered in the two previous sections. The rest of this page should be enough. Please stay within this analysis and support what you say. Example:- Canadian Tire is more profitable (bad answer) - Canadian Tire is more profitable as evidenced by the higher ROA (good answer) (please note that at this point, I don’t know if ROA is actually higher…) Q1: Has the asset structure changed in 2020? What has changed? Q2: How the financial structure changed in 2020? What has changed? Q3: List facts that show that Canadian Tire did better than last year. Q4: List facts that show that Canadian Tire did worse than last year. Q5: What is your general conclusion about the performance of Canadian Tire in 2020? (don’t’repeat your analysis, but indicate the most important pieces of information that support your conclusion)