AC1200 ACCOUNTING I
A project for the AC 1200 Accounting I course, focusing on advanced accounting concepts.
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AC1220 ACCOUNTING I Project Part 2
Page 1
AC1200 ACCOUNTING I
For this assignment, you are tasked with analyzing the financial performance of two businesses, City
Rides and Extreme Scooter, based on their financial statements for the years ending December 31, 20x3
and 20x2.
• Task 1: Complete the financial statements (Income Statement, Statement of Owner’s Equity, and
Balance Sheet) for City Rides using the adjusted trial balance provided. Fill in all the missing amounts
and ensure that the financial statements are accurate.
• Task 2: a. Compare the trends in net sales for both businesses and determine which business has
larger net sales in dollar terms.
b. Evaluate the ending capital account balances of both City Rides and Extreme Scooter, compute the
dollar change, and suggest reasons for the significant change in Extreme Scooter's ending capital
balance.
c. Compare the inventory balances of both businesses, identifying which one maintains a larger
inventory. Discuss one advantage and one disadvantage of keeping a large inventory on hand.
d. Assess the accounts receivable balances of City Rides and Extreme Scooter and determine which
company tends to sell more on account. Additionally, mention one disadvantage associated with sales
on account.
• Task 3: Compute the necessary accounting ratios for both businesses using the formulas provided. For
each ratio, explain if it is favorable or unfavorable for each business and whether the trend is improving
or deteriorating over time.
• Task 4: Based on your analysis, prepare a memorandum to the senior loan officer, Ms. Heather
Coldwell, comparing the financial health of both businesses. Make a recommendation on which business
should receive the $25,000 bank loan, justifying your choice with key points from the financial
statements and ratios.
Word Count Requirement: The memorandum should not exceed 2 pages, written in 11-point Arial font,
double-spaced.
Page 1
AC1200 ACCOUNTING I
For this assignment, you are tasked with analyzing the financial performance of two businesses, City
Rides and Extreme Scooter, based on their financial statements for the years ending December 31, 20x3
and 20x2.
• Task 1: Complete the financial statements (Income Statement, Statement of Owner’s Equity, and
Balance Sheet) for City Rides using the adjusted trial balance provided. Fill in all the missing amounts
and ensure that the financial statements are accurate.
• Task 2: a. Compare the trends in net sales for both businesses and determine which business has
larger net sales in dollar terms.
b. Evaluate the ending capital account balances of both City Rides and Extreme Scooter, compute the
dollar change, and suggest reasons for the significant change in Extreme Scooter's ending capital
balance.
c. Compare the inventory balances of both businesses, identifying which one maintains a larger
inventory. Discuss one advantage and one disadvantage of keeping a large inventory on hand.
d. Assess the accounts receivable balances of City Rides and Extreme Scooter and determine which
company tends to sell more on account. Additionally, mention one disadvantage associated with sales
on account.
• Task 3: Compute the necessary accounting ratios for both businesses using the formulas provided. For
each ratio, explain if it is favorable or unfavorable for each business and whether the trend is improving
or deteriorating over time.
• Task 4: Based on your analysis, prepare a memorandum to the senior loan officer, Ms. Heather
Coldwell, comparing the financial health of both businesses. Make a recommendation on which business
should receive the $25,000 bank loan, justifying your choice with key points from the financial
statements and ratios.
Word Count Requirement: The memorandum should not exceed 2 pages, written in 11-point Arial font,
double-spaced.
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Document Details
University
ITT Technical Institute Chantilly
Subject
Accounting