Financial Analysis Assignment: Cases on Financial Statements

This document presents a comprehensive solution to a financial analysis assignment. It includes detailed journal entries for various scenarios, such as Jassal Music Inc., Sensational Aqua Sports Corp., and Gidget's Development Corp., covering topics like prepaid expenses, inventory valuation, bad debt, and accounts payable. The assignment also features an inventory schedule for Allegro Music, calculating cost, NRV, and LCNRV. Furthermore, the solution explores the use of SAP accounting systems in Serenity Spa Vacation Inc., highlighting its benefits like improved operational efficiency, cost reduction, and risk minimization. The document concludes with an analysis of sales and warranty entries for Luke's Car Crop (LCC), offering a complete overview of financial analysis concepts and their practical application.

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RUNNING HEAD: FINNACIAL ANALYSIS
FINANCIAL ANALYSIS

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FINNACIAL ANALYSIS
Table of Contents
Introduction......................................................................................................................................2
Question 1:.......................................................................................................................................2
Question 2:.......................................................................................................................................3
Question 3:.......................................................................................................................................4
Question 4:.......................................................................................................................................5
Question 5:.......................................................................................................................................9
Question 6:.......................................................................................................................................9
Conclusion.....................................................................................................................................11
Reference list.................................................................................................................................12

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FINNACIAL ANALYSIS
Introduction
Financial analysis is a vital procedure that leads in knowing fund required to complete finance-
related entities. In a specific business organisation financial transaction are required to be
recorded in an effective manner that results in increasing organisational position in market. On
the other hand, most effective process for analysing financial data is to evaluate its financial
transactions effectively. In this study it has been analysed that different situational case study
was provided on financial basis that leads in knowing current position of the organisation in the
market. On the other hand, implementation of SAP accounting system is also assessed in the
system. However financial analysis can be conducted through investment and corporate finance
settings.
Question 1:
Calculation for Journal entry in Jassal Music Inc in 31 December 20X4
Particulars Amount (Dr.) Amount (Cr.)
Prepaid Expenses A/c …………………………Dr. $ 25,500.00
To Insurance A/c $ 25,500.00
(Being business insurance paid was recorded as prepaid
expenses, now rectified)
Prepaid Rent Income A/c …………………………Dr. $ 80,000.00
To Rental Income A/c $ 80,000.00
(Being company rented instrument to school with
appropriate contract from (September to June). Advance
was paid that was recorded as only rental income, now
rectified)
Cash A/c …………………………………………Dr. $ 6,300.00
To Instalment from Ryan A/c $ 6,000.00
To Interest received A/c $ 300.00
(Being goods sold in instalment whose first instalment was
due, now paid with the addition instalment as per the
market rate)

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FINNACIAL ANALYSIS
Computer System A/c …………………………..Dr. $ 1,800.00
To Sales A/c $ 1,650.00
To Profit and loss A/c $ 150.00
(Being violin was sold by Jassal and in exchange computer
system was obtained)
Total $ 113,600.00 $ 113,600.00
Table 1: Calculation for Journal entry in Jassal Music Inc in 31 December 20X4
(Source: Created by author)
Question 2:
Calculation for inventory schedule in Allegro Music
Inventory items
Number
of units-
year end Cost Per unit Total cost
NRV per
unit Total NRV LCNRV
Chime Set 3
$
750.00
$
2,250.00
$
790.00
$
2,370.00
$
2,250.00
Cymbals 4
$
70.00
$
280.00
$
85.00
$
340.00
$
280.00
Drum sets 3
$
450.00
$
1,350.00
$
525.00
$
1,575.00
$
1,350.00
Flutes 5
$
650.00
$
3,250.00
$
775.00
$
3,875.00
$
3,250.00
Violins 3
$
1,500.00
$
4,500.00
$
1,650.00
$
4,950.00
$
4,500.00
Guitars 7
$
62.00
$
434.00
$
45.00
$
315.00
$
315.00
Guitars - acoustic 9
$
125.00
$
1,125.00
$
132.00
$
1,188.00
$
1,125.00
Guitars - electric 12
$
190.00
$
2,280.00
$
225.00
$
2,700.00
$
2,280.00
Keyboard 4 $ $ $ $ $

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FINNACIAL ANALYSIS
2,200.00 8,800.00 2,100.00 8,400.00 8,400.00
Piano - entry 3
$
2,300.00
$
6,900.00
$
2,500.00
$
7,500.00
$
6,900.00
Piano -
introductory 5
$
4,500.00
$
22,500.00
$
4,900.00
$
24,500.00
$
22,500.00
Piano -
intermediate 2
$
12,000.00
$
24,000.00
$
14,200.00
$
28,400.00
$
24,000.00
Piano -
professional 1
$
22,500.00
$
22,500.00
$
25,000.00
$
25,000.00
$
22,500.00
Piano - uprights 2
$
5,000.00
$
10,000.00
$
7,500.00
$
15,000.00
$
10,000.00
Recorder 25
$
7.00
$
175.00
$
10.00
$
250.00
$
175.00
Saxophones 3
$
575.00
$
1,725.00
$
675.00
$
2,025.00
$
1,725.00
Triangles 5
$
55.00
$
275.00
$
65.00
$
325.00
$
275.00
Xylophones 4
$
245.00
$
980.00
$
300.00
$
1,200.00
$
980.00
Total
$
113,324.00
$
129,913.00
$
112,805.00
Table 2: Calculation for inventory schedule in Allegro Music
(Source: Created by author)
Question 3:
Calculation for journal entry for Sensational Aqua sports Corp.
Particulars Amount (Dr.) Amount (Cr.)
Allowance for Doubtful Account A/c ……...Dr. $ 1,895.00
To Account Receivables A/c $ 1,895.00
(Being recovery of account receivables was written off

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FINNACIAL ANALYSIS
in 20X3)
Bad Debt Expenses A/c ……………………Dr. $ 13,100.00
To Account receivables A/c $ 12,100.00
To Provision for bad debt A/c $ 1,000.00
(Being provision for estimated bad debt expenses was
made based on credit sales)
Allowance for Doubtful Account A/c ……...Dr. $ 31,304.00
To Account Receivables A/c $ 31,304.00
(Being written off balance for Allowance for doubtful
account)
Total $ 46,299.00 $ 46,299.00
Table 3: Calculation for journal entry for Sensational Aqua sports Corp.
(Source: Created by author)
Calculation for Allowance for doubtful account in Sensational Aqua sports
Corp.
Particulars
Summary aged at
31/12/20X3
% of
allowance
provided Total allowance
1-30 days $ 985,900.00 1% $ 9,859.00
31-60 days $ 352,500.00 5% $ 17,625.00
61-90 days $ 25,700.00 10% $ 2,570.00
> 90 days $ 5,000.00 25% $ 1,250.00
Total $ 31,304.00
Table 4: Calculation for Allowance for doubtful account in Sensational Aqua sports Corp.
(Source: Created by author)
Question 4:
Calculation for Journal entries in Gidget's Development Corp. in 20X5
Particulars Amount (Dr.) Amount (Cr.)

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FINNACIAL ANALYSIS
Expense A/c ………………………………….Dr. $ 7,000.00
To Account payable A/c $ 7,000.00
(Being cost incurred during the year in Gidget's
Development Corp. in 20X5)
Progress Billing A/c ……………………..……Dr. $ 8,500.00
To Account payable A/c $ 8,500.00
(Being Progress billing made during 20X5 in Gidget's
Development Corp.
Cash A/c …………………………………….Dr. $ 6,900.00
To Account payable A/c $ 6,900.00
(Being cash collection was made in 20X5 for Gidget's
Development Corp.)
Total $ 22,400.00 $ 22,400.00
Table 5: Calculation for Journal entries in Gidget's Development Corp. in 20X5
(Source: Created by author)
Calculation for Journal entries in Gidget's Development Corp. in 20X6
Particulars Amount (Dr.)
Amount
(Cr.)
Expense A/c ………………………………….Dr. $ 12,000.00
To Account payable A/c $ 12,000.00
(Being cost incurred during the year in Gidget's
Development Corp. in 20X6)
Progress Billing A/c ……………………..……Dr. $ 13,500.00
To Account payable A/c $ 13,500.00
(Being Progress billing made during 20X6 in Gidget's
Development Corp.
Cash A/c …………………………………….Dr. $ 12,600.00
To Account payable A/c $ 12,600.00
(Being cash collection was made in 20X6 for Gidget's
Development Corp.)

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FINNACIAL ANALYSIS
Total $ 38,100.00 $ 38,100.00
Table 6: Calculation for Journal entries in Gidget's Development Corp. in 20X6
(Source: Created by author)
Calculation for Journal entries in Gidget's Development Corp. in 20X7
Particulars Amount (Dr.) Amount (Cr.)
Expense A/c ………………………………….Dr. $ 6,500.00
To Account payable A/c $ 6,500.00
(Being cost incurred during the year in Gidget's
Development Corp. in 20X7)
Progress Billing A/c ……………………..……Dr. $ 3,000.00
To Account payable A/c $ 3,000.00
(Being Progress billing made during 20X7 in Gidget's
Development Corp.
Cash A/c …………………………………….Dr. $ 5,500.00
To Account payable A/c $ 5,500.00
(Being cash collection was made in 20X7 for Gidget's
Development Corp.)
Total $ 15,000.00 $ 15,000.00
Table 7: Calculation for Journal entries in Gidget's Development Corp. in 20X7
(Source: Created by author)
Dr. Accounts Payable A/c Cr.
Date Particulars Amount Date Particulars Amount
20X5 20X5
By Expense A/c
$
7,000.00
By Progress Billing A/c
$
8,500.00
To Balance c/d $22,400.00 By Cash A/c
$
6,900.00

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FINNACIAL ANALYSIS
Total $22,400.00 Total
$
22,400.00
20X6 20X6
By Balance b/d
$
22,400.00
By Expense A/c
$
12,000.00
By Progress Billing A/c
$
13,500.00
To Balance c/d $60,500.00 By Cash A/c
$
12,600.00
Total $60,500.00 Total
$
60,500.00
20X7 20X7
By Balance b/d
$
60,500.00
By Expense A/c
$
6,500.00
By Progress Billing A/c
$
3,000.00
To Balance c/d $75,500.00 By Cash A/c
$
5,500.00
Total $75,500.00 Total
$
75,500.00
Table 7: Calculation for Accounts Payable A/c in Gidget's Development Corp
(Source: Created by author)
Question 5:
Calculation for Sales journal entries in Luke's Car Crop (LCC)
Particulars Amount (Dr.) Amount (Cr.)

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FINNACIAL ANALYSIS
Cash A/c ……………………………..Dr $ 1,000,000.00
Warranty A/c………………………….Dr $ 35,000.00
To Sales A/c $ 1,035,000.00
(Being five cars were sold to the wealth family
by Luke's Car Crop)
Table 8: Calculation for Sales journal entries in Luke's Car Crop (LCC)
(Source: Created by author)
Calculation for warranty obligation journal entries in Luke's Car Crop (LCC)
Particulars Amount (Dr.) Amount (Cr.)
Warranty A/c………………………….Dr $ 75,000.00
To Sales A/c $ 75,000.00
(Being warranty amount that can be purchased,
while buying car)
Warranty A/c………………………….Dr $ 35,000.00
To Sales A/c $ 35,000.00
(Being actual amount that to be purchased, while
buying car)
Table 9: Calculation for warranty obligation journal entries in Luke's Car Crop (LCC)
(Source: Created by author)
Question 6:
Serenity Spa Vacation Inc. is an organisation related top tour plan of luxury health and wellness
spa. However, it has been analysed that accounting system that is used in Serenity Spa Vacation
Inc. is old and are not updated. In the recent days vice president of Serenity Spa Vacation Inc.
divided that accounting information system that leads in analysing operation made within
particular time period. Therefore, it has been decided that SAP (System Accounting and Product)
process can be used that leads in reporting daily operations made in Serenity Spa Vacation Inc.
Based on the knowledge of Heinzelmann (2017), it can be assessed that insufficiency is found in
the information system architecture. Data those are transferred between sub-systems that leads a

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FINNACIAL ANALYSIS
business to handle the operations effectively. SAP ERP systems can be integrated in Serenity
Spa Vacation Inc. system that assist in synchronizing systems and have effective communication
in the different departments. It has been often evident in the words of Yahya et al. (2018), SAP
procedure leads an organisation to have modern and extremely efficient operation. SAP rules
leads in setting cross-functional dealing processes that leads in having effective operations. In
SAP system there are important points that are essential to be kept in mind:
 Align operations and policies
Detailed analysis is required to be made before execution of SAP system. On the other hand, the
analysis is ‘As-Is’ analysis that provides brief of organisational policies. The main step is to
know the information system in precise form.
 Enhance output and insight
Productivity of Serenity Spa Vacation Inc. can develop with the use of SAP system. In reference
to the words of Blount et al. (2016), it can be opined that in SAP system there is not subsystem
required to be made to validate data. On the other hand, in Serenity Spa Vacation Inc.
organisational staff can continue with different dealings including with the terminals. Therefore,
in Serenity Spa Vacation Inc. use of SAP system leads in having overall reporting system and
analytic setting effectively.
 Reduction in cost and increase in flexibility
SAP System expands business ecological unit for Serenity Spa Vacation Inc. that leads in
bringing consistency, flexibility and efficiency. However, consistency, flexibility and efficiency
can be bought in the business through extrapolating dealings, collaborative tasks and information
(Heinzelmann, 2017).
 Minimizing risk
In the current market for Serenity Spa Vacation Inc. complicated business challenges can be met
with SAP. On the other hand, based on the words of Barkhi & Kozlowski (2017), longstanding
growth can be experienced by an organisation as deep visibility is made in the business

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FINNACIAL ANALYSIS
operational system. Along with this, in Serenity Spa Vacation Inc. executive accounting
functionalities can be enhanced that improves financial tractional management and reduces risk.
 Higher rate of ROI
SAP system is assessed as a swift execution system that leads in having conventional approaches
in price. Expenses by leveraging on fixed defaults are offered that leads an organisation to obtain
high rate on return on investment value.
Conclusion
Financial analysis is used in an organisation as the process leads in stabilising liquid or profitable
position of the found that is invested. Financial analysis is made to know the economic trends
and set different financial policies to build long-term plans. In a particular business association
money related exchange are required to be recorded in a successful way that outcomes in
expanding authoritative position in market. SAP ERP frameworks can be coordinated in Serenity
Spa Vacation Inc. framework that help with synchronizing frameworks and have powerful
correspondence in the various divisions. SAP System extends business environmental unit for
Serenity Spa Vacation Inc. that leads in bringing consistency, adaptability and proficiency.
Nonetheless, consistency, adaptability and productivity can be purchased in the business through
extrapolating dealings, community undertakings and data. Information those are moved between
sub-frameworks that leads a business to deal with the tasks successfully. Then again, best
procedure for breaking down budgetary information is to assess its money related exchanges
viably. Consequently, in Serenity Spa Vacation Inc. utilization of SAP framework leads in
having in general announcing framework and diagnostic setting successfully.
Reference list