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AC1220 Financial Statement Analysis and Loan Recommendation for City Rides and Extreme Scooter

This assignment analyzes financial statements for City Rides and Extreme Scooter and provides loan recommendations.

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AC1220 ACCOUNTING IProject Part 2Page1AC1220 Financial Statement Analysis and Loan Recommendation for CityRides and Extreme ScooterTask 1a.Using the adjusted trial balance provided, prepare the income statement, statement ofowner’s equity, and balance sheet for City Rides for thetwo years ended December 31,20x3.Complete the financial statements by filling in the shaded cells with the required amounts.(Word count: 500 words)b.Using the financial statements of Extreme Scooter and City Rides, compare theirfinancial positions.Answer the following:1.Which business has the larger net sales in dollar terms, and what is the trend in net salesover the two years for both companies?2.Compare the ending capital balances of the two businesses, compute the dollar increaseor decrease, and suggest a reason for the large change in ending capital for ExtremeScooter.3.Compare the inventory balances of both businesses. Which tends to have more inventoryon hand, and what are one advantage and one disadvantage of keeping large amounts ofinventory?4.Compare the accounts receivable balances. Which business tends to sell more on account,and what is one disadvantage associated with sales on account?(Word count: 750 words)Task 2a.Compute the accounting ratios for City Rides and Extreme Scooter for the year endingDecember 31, 20x3.Provide an analysis of each ratio, explaining whether it is favorable orunfavorable and indicating the trend over time.(Word count: 600 words)Task 3Imagine you are an accountant reporting to the senior commercial loan officer of a regionalbank.The bank is deciding between approving a $25,000 loan application from City Rides orExtreme Scooter. Compare the financial health of both businesses based on their financialstatements, ratios, and other insights from your analysis. Provide a recommendation on whichbusiness should receive the loan and justify your decision.(Word count: 800 words)

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