AC1220ACCOUNTING IProject Part 2Page1AC1200 ACCOUNTING IFor this assignment, you are tasked with analyzing the financial performance of two businesses, CityRides and Extreme Scooter, based on their financial statements for the years ending December 31, 20x3and 20x2.•Task 1: Complete the financial statements (Income Statement, Statement of Owner’s Equity, andBalance Sheet) for City Rides using the adjusted trial balance provided. Fill in all the missing amountsand ensure that the financial statements are accurate.• Task 2: a. Compare the trends in net sales for both businesses and determine which business haslarger net sales in dollar terms.b. Evaluate the ending capital account balances of both City Rides and Extreme Scooter, compute thedollar change, and suggest reasons for the significant change in Extreme Scooter's ending capitalbalance.c. Compare the inventory balances of both businesses, identifying which one maintains a largerinventory. Discuss one advantage and one disadvantage of keeping a large inventory on hand.d. Assess the accounts receivable balances of City Rides and Extreme Scooter and determine whichcompany tends to sell more on account. Additionally, mention one disadvantage associated with saleson account.• Task 3: Compute the necessary accounting ratios for both businesses using the formulas provided. Foreach ratio, explain if it is favorable or unfavorable for each business and whether the trend is improvingor deteriorating over time.• Task 4: Based on your analysis, prepare a memorandum to the senior loan officer, Ms. HeatherColdwell, comparing the financial health of both businesses. Make a recommendation on which businessshould receive the $25,000 bank loan, justifying your choice with key points from the financialstatements and ratios.Word Count Requirement: The memorandum should not exceed 2 pages, written in 11-point Arial font,double-spaced.Preview Mode
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