Miss Terious Inc.

Setting
You are the controller for a small corporation named Miss Terious Inc. Before attending
the meeting with the CEO, you have to print the financial statements that you previously
prepared. Unfortunately, you notice that a virus affected your computer. As you are
looking at your screen, the information is slowly erased. In a moment of panic, you take a
pencil and reproduce some of the numbers in the financial statements before they
completely disappear. The information that you are able to save is presented in exhibit 1.
You also found in your briefcase a previous version of the notes to the financial
statements (see exhibit 2).
Using the information that is available to you, you decide to attempt to reproduce the
financial statements. This is not your lucky day since you cannot have access to your
main computer that has all the bookkeeping information. The only help you have is the
two exhibits and your personal knowledge. You absolutely need the financial statements
for your meeting and you realize that your reputation depends on your ability to
reproduce the statements.
Required

Using the information provided in the exhibits, reproduce the financial statements. Show
calculations.

Robert Mathieu, WLU

Exhibit 1
Miss Terious Inc.
Income Statement, Retained Earnings and Comprehensive Income
For the fiscal year ended December 31, 2012
Sales
Cost of Goods sold
Inventory at the beginning
Purchases
Cost of goods available for sale
Inventory at the end
Gross profit
Operating expenses
Amortization building
Amortization truck
Bad debt expense
Insurance
Maintenance
Miscellaneous
Promotion
Salaries
Operating profit
Other expenses and losses
Interest expense
Loss on disposal of a truck
Other revenues and gains
Dividend revenues
Income taxes (40%)
Net income
Retained earnings at the beginning
Dividends
Retained earnings at the end

$1,363,000
$90,000
924,000
1,014,000
?
?
?
?
6,000
18,000
4,100
9,000
177,000
53,500
?
23,300

?
?

?
?
?
?
23,300
?
?
?
165,100
?
$
?

Miss Terious Inc.

Balance Sheet
December 31
2012
Assets
Current assets
Cash
Accounts Receivable
Allowance doubtful accounts (note 1)
Inventory
Prepaid expenses
Total current assets
Capital assets
Land
Building
Less: accumulated amortization
Trucks
Less: accumulated amortization
Total capital assets
Long-term investments
Total assets
Liabilities and Shareholders Equity
Current liabilities
Accrued salaries
Accounts payable
Income tax payable
Interests payable
Dividends payable
Unearned revenues
Current portion of long-term debt
Total current liabilities
Long-term debt and bank loan (note 2)
Unearned revenues
Bonds payable
Total liabilities
Shareholders Equity
Share capital
Retained earnings
Total shareholders equity
Total liabilities & shareholders equity

2011
$?

$?
?

?
?
?
?

$?
$90,100
1,500

?
?
?
?
85,000

?
?
?
45,000
$
?

88,600
?
3,600
?
260,000

575,000
320,000
125,000
113,000

255,000
12,000
527,000
25,000
$
?

$9,900
158,700
30,228
5,400
42,000
?
?
?
?
20,000
?
?

$6,000
77,100
22,200
3,900
26,100
20,000
9,000
164,300
218,000
40,000
200,000
622,300

?
?
?
$

48,000
?
?
?

Miss Terious Inc.

Cash Flow Statement
For the fiscal year ended December 31, 2012
OPERATING ACTIVITIES
Net income
Items not affecting cash:
Loss on disposal of a truck
Amortization building
Amortization trucks
Changes in working capital items:
Increase in accounts receivable
Increase in merchandise inventory
Increase in prepaid expenses
Increase in accrued salaries
Increase in accounts payable
Increase in income tax payable
Increase in interests payable
Decrease in unearned revenues
Cash flows from operation

(44,870)
(45,000)
(7,900)
3,900
81,600
8,028
1,500
(5,000)
?

FINANCING ACTIVITIES (note 8)

Issue of bonds
Issue of shares
Issue of bank loans
Payment of long-term debt
Dividends paid
Cash flows generated from financing activities

525,000
18,000
?
?
(29,100)
?

INVESTING ACTIVITIES (note 8)

Proceed from disposal of a truck
Acquisition of long-term investments
Acquisition of building
Acquisition of truck
Cash flows used by investing activities
Change in cash position during the year
Cash at the beginning of the fiscal year
Cash at the end of the fiscal year

$?
8,000
8,000
4,000

10,000
(20,000)
(385,000)
(70,000)
(465,000)
?
101,200
$
?

Exhibit 2
Miss Terious Inc.
Notes to the financial statements
Note 1
During the fiscal year 2005, the company has decided to use 1% of sales as bad debt (a
income statement approach). No receivables were written-off during the fiscal year.
Note 2
Long-term debt and bank loan
Long-term debt :
Current portion
Long-term portion

2012

2011

$9,000
209,000
$218,000

$9,000
218,000
$227,000

$15,000

$----------

Bank loan
The bank loan is payable in the fiscal year 2014 and the loan-term debt is a mortgage
Note 3
No non-cash transactions involving financing and investing activities were recorded
during the fiscal year 2012.