EXERCISE 4.1 FINE JEWELRY, INC.

ASSETS = LIABILITIES +

Current Assets + Non current Assets = Short Term Liabilities + Long Term Liabilities +

DESCRIPTION Other Short-

OF Cash + Accounts + Inventories + Prepai + Equipment + Building + Trademark + Fixed =
Accounts + Taxes + Interest + term + … + … +
receivable d rent payable payable payable
TRANSACTIONS Assets loan

1715450 + 950000 + 708000 + 75000 + 1000000 + 1800000 + + = 1575000 + 61000 + 80000 + 1000000 + + +

+ + + + + + + = + + + + + +

+ + + + + + + = + + + + + +

- + + + + + + + + = + + + + + +

+ + - + + + + + + = + + + + + +

+ + + + + + + = + + + + + +

+ + + + + + + = + + + + + +

+ + + + + + + = + + + + + +

+ + + + + + + = + + + + + +

+ + + + + + + = + + + + + +

+ + + + + + + = + + + + + +

+ + + + + + + = + + + + + +

ENDING BALANCE 1715450 + 950000 + 708000 + ### + 1000000 + 1800000 + 0 + 0 = 1575000 + 61000 + 80000 + 1000000 + 0 + 0 +
 OWNERS' EQUITY

Owners' Equity

Common + Share + Retained + Net income

stock premium Earnings (P&L) Profit

300000 + 1510360 + 1502640 + 219450

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

300000 + 1510360 + 2E+06 + 219450

 Balance Sheet

FINE JEWELRY, INC.

INSERT DATE
before decision on profit distribution
(in $)

ASSETS LIABILITIES AND OWNERS' EQUITY

CURRENT ASSETS SHORT TERM LIABILITIES

#VALUE! 1,715,450 #VALUE! 1,575,000

#VALUE! 950,000 #VALUE! 61,000
#VALUE! 708,000 #VALUE! 80,000
#VALUE! 75,000 #VALUE! 1,000,000

Total Current Assets 3,448,450 Total Short Term Liabilities 2,716,000

NON CURRENT ASSETS TOTAL LIABILITIES 2,716,000

#VALUE! 1,000,000 OWNERS' EQUITY

#VALUE! 1,800,000
0 0 #VALUE! 300,000
0 0 #VALUE! 1,510,360
#VALUE! 1,502,640
#VALUE! 219,450
Total Non Current Assets 2,800,000
TOTAL OWNERS' EQUITY 3,532,450

TOTAL ASSETS 6,248,450 TOTAL LIAB. & OE 6,248,450

###
Analysis of transactions & Journalizing
(except implicit transactions, taxes and distribution of profits)

FINE JEWELRY, INC.

Opening entry Nov. 30th 2003

100 Share Capital 143,000
173 Suppliers of fixed assets (long term) 60,000
220 Land and natural assets 20,000
221 Buildings 50,000
226 Furnishings 15,000
300 Inventories (commercial goods) 100,000
435 Customers, doubtful debts 50,000
572 Bank, Checking accounts, etc 30,000
490 Provision for bad debts 50,000
600 Purchase of commercial goods 120,000
625 Insurance premiums 10,000
640 Wages and salaries 35,000
642 Employer's Social Security costs 10,000
694 Allocation to provision for bad debts 50,000
700 Sales of commercial goods 250,000
430 Customers 90,000
400 Suppliers 77,000

1 Dec 16
228 Vehicles 14,000
173 Suppliers of fixed assets (long term) 14,000

2 Dec 16
435 Customers, doubtful debts 15,000
430 Customers 15,000

694 Allocation to provision for bad debts 15,000

490 Provision for bad debts 15,000

3 Dec 19
226 Furnishings 5,000
572 Bank, Checking accounts, etc 5,000

4 Dec 24
430 Customers 9,750
700 Sales of commercial goods 9,750

5 Dec 28
650 Losses from bad debts 15,000
435 Customers, doubtful debts 15,000

490 Provision for bad debts 15,000

794 Application of provision for bad debts 15,000

6 Dec 29
627 Advertising, publicity and public relations 5,000
572 Bank, Checking accounts, etc 5,000

7
430 Customers 15,000
435 Customers, doubtful debts 15,000

490 Provision for bad debts 15,000

794 Application of provision for bad debts 15,000

8 Dec 30
460 Advances on salaries 1,000
572 Bank, Checking accounts, etc 1,000

9 Dec 31
572 Bank, Checking accounts, etc 1,500
435 Customers, doubtful debts 1,500

650 Losses from bad debts 8,500

435 Customers, doubtful debts 8,500
490 Provision for bad debts 8,500
794 Application of provision for bad debts 8,500
Posting to the Ledger

173 Suppliers of fixed assets

100 Share Capital (long term) 220 Land and natural assets 221 Buildings
143,000 OE 60,000 OE OE 20,000 OE 50,000
14,000 1

143,000 74,000 20,000 50,000

0 0 0 74,000 20,000 0 50,000 0

300 Inventories (commercial 435 Customers, doubtful 572 Bank, Checking

226 Furnishings goods) debts accounts, etc
OE 15,000 OE 100,000 OE 50,000 15,000 5 OE 30,000 5,000 3
3 5,000 2 15,000 15,000 7 9 1,500 5,000 6
1,500 9 1,000 8
8,500 9

65,000 40,000 31,500 11,000

20,000 100,000 25,000 20,500
0 31,500

600 Purchase of commercial

490 Provision for bad debts goods 625 Insurance premiums 640 Wages and salaries
5 15,000 50,000 OE OE 120,000 OE 10,000 OE 35,000
7 15,000 15,000 2
9 8,500

38,500 65,000
26,500 120,000 10,000 35,000

642 Employer's Social 694 Allocation to provision 700 Sales of commercial

Security costs for bad debts goods 430 Customers
OE 10,000 OE 50,000 250,000 OE OE 90,000 15,000 2
2 15,000 9,750 4 4 9,750
7 15,000

10,000 65,000 259,750 99,750

10,000

400 Suppliers 228 Vehicles 650 Losses from bad debts

77,000 OE 1 14,000 5 15,000
9 8,500

77,000 14,000 23,500

794 Application of provision 627 Advertising, publicity

for bad debts and public relations 460 Advances on salaries
15,000 5 6 5,000 8 1,000
15,000 7
8,500 9

38,500 5,000 1,000

Adjustments (posting to the Journal)

FINE JEWELRY, INC.

a
640 Wages and salaries 12,000
#VALUE! 12,000

b
#VALUE! 4,000
#VALUE! 2,500
#VALUE! 1,500

d
120,000
#VALUE! 120,000

10,000
#VALUE! 10,000

47,000
#VALUE! 47,000

10,000
#VALUE! 10,000

65,000
#VALUE! 65,000

23,500
#VALUE! 23,500

4,500
#VALUE! 4,500

5,000
#VALUE! 5,000

#VALUE! 259,750
259,750

#VALUE! 28,500
28,500
Posting to the Ledger

173 Suppliers of fixed assets

100 Share Capital (long term) 220 Land and natural assets 221 Buildings
143,000 OE 60,000 OE OE 20,000 OE 50,000
14,000 1

143,000 74,000 20,000 50,000

300 Inventories (commercial 435 Customers, doubtful 572 Bank, Checking

226 Furnishings goods) debts accounts, etc
OE 15,000 OE 100,000 OE 50,000 15,000 5 OE 30,000 5,000 3
3 5,000 2 15,000 5,000 7 9 1,500 5,000 6
1,500 9 1,000 8
8,500 9

65,000 30,000 31,500 11,000

20,000 100,000 35,000 20,500
0 21,500

600 Purchase of commercial

490 Provision for bad debts goods 625 Insurance premiums 640 Wages and salaries
5 15,000 50,000 OE OE 120,000 120,000 d OE 10,000 10,000 d OE 35,000 47,000 d
7 5,000 15,000 2 a 12,000
9 8,500

28,500 65,000
36,500 0 0 0

642 Employer's Social 694 Allocation to provision 700 Sales of commercial

Security costs for bad debts goods 430 Customers
OE 10,000 10,000 d OE 50,000 65,000 d d 259,750 250,000 OE OE 90,000 15,000 2
2 15,000 9,750 4 4 9,750
7 5,000

104,750
0 0 0 89,750
10,000

400 Suppliers 228 Vehicles 650 Losses from bad debts

77,000 OE 1 14,000 5 15,000 23,500 d
9 8,500
 77,000 14,000 0

794 Application of provision 627 Advertising, publicity 465 Salaries pending

for bad debts and public relations 460 Advances on salaries payment
d 28,500 15,000 5 6 5,000 5,000 d 8 1,000 12,000 a
5,000 7
8,500 9

28,500 0 1,000 12,000

682 Depreciation of tangible 2821 Accumulated 2826 Accumulated

fixed assets depreciation: buildings depreciation: furnishings
b 2,500 4,000 d 2,500 b 1,500 b
b 1,500

0 2,500 1,500

129 Profits and Losses

d 600 Purchase of commercial goods 120,000 700 Sales of commercial goods 259,750 d
d 625 Insurance premiums 10,000 794 Application of provision for bad debts 28,500 d
d 640 Wages and salaries 47,000
d 642 Employer's Social Security costs 10,000
d 694 Allocation to provision for bad debts 65,000
d 650 Losses from bad debts 23,500
d 682 Depreciation of tangible fixed assets 4,000
d 627 Advertising, publicity and public rel. 5,000

284,500 288,250
3,750
 ADJUSTED TRIAL BALANCE (before distribution of profits)
FINE JEWELRY, INC.
As of Dec 31st 2003

SUMS BALANCES
Debit Credit Debit Credit

100 Share Capital 143,000 143,000

#VALUE! 74,000 74,000
#VALUE! 20,000 20,000
#VALUE! 50,000 50,000
#VALUE! -2,500 -2,500
226 Furnishings 20,000 20,000
#VALUE! -1,500 -1,500
#VALUE! 14,000 14,000
#VALUE! 100,000 100,000
400 Suppliers 77,000 77,000
#VALUE! 104,750 15,000 89,750
#VALUE! 65,000 30,000 35,000
#VALUE! 1,000 1,000
#VALUE! 12,000 12,000
490 Provision for bad debts 28,500 65,000 36,500
#VALUE! 31,500 11,000 20,500
#VALUE!
#VALUE! 0
#VALUE!
#VALUE!
#VALUE! 0
#VALUE!
#VALUE!
#VALUE!
#VALUE!
#VALUE!
129 Profits and Losses 288,250 284,500 3,750

719,000 711,500 346,250 346,250

7,500
 FINE JEWELRY, INC.
PROFIT AND LOSS ACCOUNT Jan 1-Dec 30 1995
(in $)

Sales revenue 4000000

- COG 1900000

GROSS MARGIN 2100000

- Rent 291000
- S&A expenses 1310000
- Depreciation 200000

OPERATING PROFIT 299000

- Financial expenses 80000

PROFIT ORDINARY OPERATIONS 219000

Non typical revenues 450

INCOME BEFORE TAXES 219450

- Corporate Taxes 0

NET INCOME 219450