Comprehensive Financial Accounting Analysis: PA Engineering Inc.

This document provides a comprehensive financial accounting analysis of PA Engineering Inc. It begins with journal entries, including initial transactions and adjusting entries, followed by the posting of these entries to T-accounts. The assignment then progresses to the preparation of key financial statements, such as the income statement, statement of stockholder's equity, balance sheet, and statement of cash flow. Furthermore, the solution includes journal closing entries and a detailed calculation and interpretation of financial ratios, including current ratio, asset turnover, and net profit margin. The document concludes with a list of references and supporting tables, offering a complete overview of the company's financial performance and position. This assignment is designed to provide a practical application of accounting principles and is available on Desklib for student use.

FINANCIAL ACCOUNTING

Table of Contents
ACCOUNTING QUESTIONS........................................................................................................1
21. Beginning T- account.............................................................................................................1
22. Journal entries of transactions................................................................................................1
23. Journalising adjusting entries.................................................................................................3
Posting transaction and adjusting entries to T-accounts..............................................................3
24. Preparation of financial statements of PA Engineering Inc...................................................6
25. Journal closing entries............................................................................................................9
26. Calculation of ratios and interpretation..................................................................................9
REFERENCES..............................................................................................................................12

Index of Tables
Table 1 Journal of PA Engineering Inc...........................................................................................1
Table 2 Adjusting entries in the Books of PA Engineering Inc......................................................3
Table 3 Income statement of PA Engineering Inc for the year ended Dec. 31, 2012.....................6
Table 4 Statement of stockholder's equity of PA Engineering Inc for the year ended Dec. 31,
2012.................................................................................................................................................6
Table 5 Balance sheet of PA Engineering Inc as on 31st Dec, 2012...............................................7
Table 6 Statement of cash flow of PA Engineering for the year ended Dec, 2012.........................8
Table 7 Journal closing entries in the books of PA Engineering Inc...............................................9
Table 8 Calculation of ratio and interpretation................................................................................9

ACCOUNTING QUESTIONS
21. Beginning T- account
Cash
B. Bal 10,000.00
10,000.00
1

22. Journal entries of transactions
Table 1 Journal of PA Engineering Inc.
2

3

23. Journalising adjusting entries
Table 2 Adjusting entries in the Books of PA Engineering Inc.
Posting transaction and adjusting entries to T-accounts
Cash
B. Bal 10,000.00 10,000.00 (b)
(a) 20,000.00 100,000.00 (e)
(c ) 140,000.00 8,000.00 (g)
(d) 4,600.00 18,000.00 (h)
(f) 40,000.00 10,000.00 (k)
214,600.00 146,000.00
68,600.00
Land
(b) 10,000.00
4

Interest Payable
1,000.00 (n)
Income Tax Payable
10,000.00 (p)
Contributed Capital
115,000.00 B. Bal
4,600.00 (d)
119,600.00
Dividends Declared
(k) 10,000.00
Remaining Expenses
(e) 120,000.00
Accounts Receivable
( c) 60,000.00 40,000.00 (f)
60,000.00 40,000.00
20,000.00
Computers
B. Bal 80,000.00
Accounts Payable
(h) 18,000.00 20,000.00 (e)
25,000.00 (i)
18,000.00 45,000.00
27,000.00
5

Salaries and Wages Payable
15,000.00 (o)
Accumulated Depreicaiton
21,000.00 (m)
Service Revenue
200,000.00 ( c)
Interest Expense
(n) 1,000.00
Retained Earnings
Prepaid Office Supplies
B. Bal 20,000.00 27,000.00 (l)
(i) 25,000.00
45,000.00 27,000.00
18,000.00
Miscellaneous Other Assets
B. Bal 5,000.00
(g) 8,000.00
13,000.00
Notes Payable
20,000.00 (a)
Supplies Expense
(l) 27,000.00
6

Wages Expense
(o) 15,000.00
Depreciation Expense
(m) 21,000.00
Income Tax Expense
(p) 10,000.00
24. Preparation of financial statements of PA Engineering Inc
Table 3 Income statement of PA Engineering Inc for the year ended Dec. 31, 2012
Table 4 Statement of stockholder's equity of PA Engineering Inc for the year ended Dec. 31,
2012
PA Engineering, Inc.
Statement of Stockholder's Equity
For the Year Ended December 31, 2012
7

Contributed Capital: December 31, 2011, 100,000 shares $ 115,000.00
Add: January 3, 2012 issue of 4,000 shares 4,600.00
Total Contributed Capital at December 31, 2012 119,600.00
Retained Earnings:
Balance December 31, 2011 -
Add: Net Income 6,000.00
Less Dividends (10,000.00)
Balance December 31, 2012 (4,000.00)
Total Stockholder's Equity $ 115,600.00
Table 5 Balance sheet of PA Engineering Inc as on 31st Dec, 2012
Assets Amount Liabilities Amount
Current Assets Current Liabilities
Cash
$
68,600.0
0 Accounts Payable
$
27,000.0
0
Accounts Receivable
20,000.0
0
Salaries and Wages
Payable
15,000.0
0
Prepaid Office Supplies
18,000.0
0 Interest Payable 1,000.00
Income Tax
Payable
10,000.0
0
Total Current Assets
106,600.
00
Total Current
Liabilities
53,000.0
0
Long-Term Notes
Payable
20,000.0
0
Long-Term Assets
Land
10,000.0
0
Computers
80,000.0
0 Contributed Capital
119,600.
00
8

Less: Accumulated
Depreciation (enter as -)
(21,000.0
0) Retained Earnings
(4,000.00
)
Miscellaneous Other
Assets
13,000.0
0
115,600.
00
Total Long-Term
Assets
82,000.0
0
Total Assets
$
188,600.
00
Total Liabilities and
Owners' Equity
$
188,600.
00
Table 6 Statement of cash flow of PA Engineering for the year ended Dec, 2012
9