HRM732 – Individual Assignment #1

Completed by: Shirley Cho

HRM732
Individual Assignment #1 (40 Marks) 15% of the overall grade for the course

Ron Abrams has come into your office for his weekly 1 on 1 in which you update him on your weekly progress on
your projects. He has arrived with a stack of paperwork in his hands and a befuddled look on his face. You ask
what’s going on and he responds as follows. “Last year, as you know, we purchased a bankrupt, closed down
bottling facility in The Ukraine. I don’t know if you know this but in countries other than Canada they are using
somewhat different accounting policies than we do, and the reports I have for the first few months of operations
for that location look nothing like anything I have seen before. I’m aware that the company made no money this
month as it’s had no sales or operations, but I cannot understand our capital position. I’m leaving you with a new
project. I know you’ve been learning accounting so I want you to take the opening information for the business
from the date of purchase and come up with the balance sheet as it should appear to me as a Canadian Reader.”
You are somewhat puzzled with this new challenge, yet flattered at the same time, and agree to take it on.

Given:
The newly purchased firm was bought on November 1. At inception the balance sheet accounts of the firm were as
follows:

Account Name $ Account Name $

Accounts Payable 85,000 Bonds Payable (Over 1 Year) 45,000
Accounts Receivable 67,000 Share Capital 936,200
Land 490,000 Furniture and Fixtures 15,000
Building 320,000 Wages Payable 55,000
Equipment 175,000 Bottle Processing Patent Fee's Payable 25,000
Cash 2,200 Taxes Payable 58,000
Notes Payable 60,000 Bottle Inventory 195,000

During the month of November the following transactions occurred:

Accounts Receivable for $16,000 was collected.

Wages due of $15,000 were paid out in cash.
$175,000 in Equipment was purchased on credit ($100 was due on delivery and was paid in cash).
Their land was appraised and found to be worth $560,000.
A stakeholder, Bruce Wayne, provided the company with equipment and in return received $65,000 in shares.
$300,000 in shares was retired for bonds payable on December 15, 2025.
Bottle Processing Patent Fees were paid completely out on Credit.
$175,000 in Old Bottles was returned to the former supplier for their cash value.
A bank loan for $65,000 was taken out. The amount was kept in cash over the end of the month.

Required:
Create a Balance Sheet for November 30th assuming no other transactions occurred for the month other than
those noted above.

1-Conversion to Canadian Balance Sheet and T-Accounts (17 marks)

2- Final Balance Sheet (23 Marks)

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 HRM732 – Individual Assignment #1
Completed by: Shirley Cho

1. Conversion to Canadian Balance Sheet and T-Accounts

Warner Bros.
Balance Sheet
November 1
Assets
Cash $2,200
Accounts Receivable 67,000
Land 490,000
Building 320,000
Equipment 175,000
Furniture and Fixtures 15,000
Bottle Inventory 195,000
Total Assets $1,264,200
Liabilities and Owner’s Equity
Liabilities
Accounts Payable $85,000
Notes Payable 60,000
Bonds Payable 45,000
Wages Payable 55,000
Bottle Processing Patent Fee’s Payable 25,000
Taxes Payable 58,000
Total Liabilities $328,000
Owner’s Equity
Share Capital, November 30 936,200
Total Liabilities and Owner’s Equity $1,264,200

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 HRM732 – Individual Assignment #1
Completed by: Shirley Cho

Analysis of Transactions in November

a) Accounts Receivable for $16,000 was collected.
Basic Analysis: decreases Accounts Receivables and increases Cash
Debit/Credit Analysis: Credits decrease in Accounts Receivable and Debits increase in Cash $16,000
b) Wages due of $15,000 were paid out in cash.
Basic Analysis: decreases Wages Payable and decreases Cash
Debit/Credit Analysis: Debits decrease in Wages Payable and Credits decrease in Cash $15,000
c) $175,000 in Equipment was purchased on credit ($100 was due on delivery and was paid in cash).
Basic Analysis: increases Equipment and Accounts Payable and decreases Cash
Debit/Credit Analysis: Debits increase in Equipment $175,000, Credits increase in Accounts Payable $174,900
and Credits increase in Cash $100
d) Their land was appraised and found to be worth $560,000.
Does not require an entry based on the monetary unit assumption because it is an appraisal so it does not
result in a transaction. Also, based on the historical cost principal, assets must always be recorded at their
historical (original) cost, regardless of the current perceived fair market value (Module 2, page 5).
e) A stakeholder, Bruce Wayne, provided the company with equipment and in return received $65,000 in shares.
Basic Analysis: increases Equipment and increases Share Capital
Debit/Credit Analysis: Debits increase in Equipment and Credits increase in Share Capital $65,000
f) $300,000 in shares was retired for bonds payable on December 15, 2025.
Basic Analysis: increases Bonds Payable and decreases Share Capital
Debit/Credit Analysis: Credits increase in Bonds Payable and Debits decrease in Share Capital $300,000
g) Bottle Processing Patent Fees were paid completely out on Credit.
Basic Analysis: decreases Bottle Processing Patent Fee’s Payable and increases Accounts Payable
Debit/Credit Analysis: Debits decrease in Bottle Processing Patent Fee’s Payable and Credits increase Accounts
Payable $25,000
h) $175,000 in Old Bottles was returned to the former supplier for their cash value.
Basic Analysis: decreases Bottle Inventory and increases Cash
Debit/Credit Analysis: Credits decrease in Bottle Inventory and Debits increase in Cash $175,000
i) A bank loan for $65,000 was taken out. The amount was kept in cash over the end of the month.
Basic Analysis: increases Accounts Payable and increases Cash
Debit/Credit Analysis: Credits increase in Accounts Payable and Debits increase in Cash $65,000

Note: there are no entries to Land, Furniture & Fixtures, Notes Payable and Taxes Payable.

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 HRM732 – Individual Assignment #1
Completed by: Shirley Cho

Conversion to T-Accounts

Cash
Opening balance:
2,200 b) 15,000
a) 16,000 c) 100
h) 175,000
i) 65,000
Closing balance:
243,100
Accounts Receivable
Opening balance:
67,000 a) 16,000
Closing Balance:
51,000

Equipment
Opening balance:
175,000
c) 175,000
e) 65,000
Closing balance:
415,000
Bottle Inventory
Opening balance:
195,000 h) 175,000
Closing balance:
20,000

Accounts Payable
Opening balance:
85,000
c) 174,900
g) 25,000
i) 65,000
Closing balance:
349,900
Bonds Payable
Opening balance:
45,000
f) 300,000
Closing balance:
345,000

Wages Payable
Opening balance:
b) 15,000 55,000

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 HRM732 – Individual Assignment #1
Completed by: Shirley Cho

Closing balance:
40,000
Bottle Processing Patent Fee’s Payable
Opening balance:
g) 25,000 25,000
Closing Balance:
0

Share Capital
Opening balance:
936,200

e) 65,000
Closing balance:
f) 300,000 701,200

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 HRM732 – Individual Assignment #1
Completed by: Shirley Cho

2. Final Balance Sheet

Warner Bros.
Balance Sheet
November 30
Assets
Cash 243,100
Accounts Receivable 51,000
Land 490,000
Building 320,000
Equipment 415,000
Furniture and Fixtures 15,000
Bottle Inventory 20,000
Total Assets $1,554,100
Liabilities and Owner’s Equity
Liabilities
Accounts Payable 349,900
Notes Payable 60,000
Bonds Payable 345,000
Wages Payable 40,000
Bottle Processing Patent Fee’s Payable 0
Taxes Payable 58,000
Total Liabilities 852,900
Owner’s Equity
Share Capital, November 30 701,200
Total Liabilities and Owner’s Equity $1,554,100

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