There are 2 parts to this assignment – Survivor Limited AND the #1 - #10 journal entries.
Survivor Limited (SL) was incorporated and commenced operations on January 1, 2023. Jeff
Probst, the company's only employee, consults with various clients and uses expensive
equipment to complete his work. When the company was formed, Jeff bought 1,000 common
shares. At the beginning of 2024, another 500 common shares were sold to Boston Rob.
In addition to selling shares, SL received financing (a loan) on January 1, 2023 from Parvati
Shallow. Parvati required the company to pay only the interest on the loan and no principal in
2023, which SL did. However, Parvati wanted both interest and a portion of the principal to be
paid during 2024. These payments were made evenly throughout 2024. Parvati was surprised
when SL paid down more of the loan balance in 2024 than was asked for.
The following shows the financial statements of the company for the past two years:
Survivor Limited
Income Statement
For the year Ended December 31
2024 2023
Service revenue $220,000 $150,000
Operating expenses:
Salaries expense $140,000 $85,000
Rent and other office expenses 33,000 27,000
Depreciation expense 26,250 18,750
Interest expense 7,800 8,900
Total operating expenses $207,050 $139,650
Income before income tax 12,950 10,350
Income tax 3,885 3,105
Net income $ 9,065 $ 7,245
Survivor Limited, continued
Survivor Limited
Balance Sheet
As at December 31
2024 2023
Assets
Current assets
Cash $ 15,770 $ 29,095
Accounts receivable 40,000 10,000
Total current assets 55,770 39,095
Equipment 175,000 125,000
Accumulated depreciation (45,000) (18,750)
Total non-current assets 130,000 106,250
Total assets $185,770 $145,345
Liabilities and Shareholders’ Equity
Liabilities
Current liabilities
Accounts payable $ 39,460 $ 13,100
Current portion of loan payable 10,000 15,000
Total current liabilities $49,460 $28,100
Loan payable 60,000 75,000
Total liabilities $109,460 $103,100
Shareholders’ Equity
Common shares $60,000 $35,000
Retained earnings 16,310 7,245
Total shareholders’ equity $76,310 $42,245
Total liabilities and shareholders’ equity $185,770 $145,345
Survivor Limited, continued – Please upload this as question 1
(1) When the company was formed, how much (in dollars) did Jeff pay for his shares?
____________________________
(2) How much (in dollars) did Boston Rob pay for his shares?
____________________________
(3) At the end of 2023, what portion of the loan did Parvati want paid off in 2024?
____________________________
(4) How much of the loan was actually paid off in 2024?
____________________________
(5) What was the total amount of cash received by Parvati in 2023?
____________________________
(6) What was the total amount of cash received by Parvati in 2024?
____________________________
(7) Calculate the current ratio for each year. Has the company's liquidity improved or
deteriorated (is the change favourable or unfavourable)?
2024 2023 Favourable (F) or
Unfavourable (U)
Current ratio
(8) Calculate the debt to total assets ratio for each year. Did the company's solvency improve
or deteriorate (is the change favourable or unfavourable)?
2024 2023 Favourable (F) or
Unfavourable (U)
Debt to total assets
Journal Entries, page 1 – Please upload this as question 2
Prepare journal entries for the following transactions. If no entry is required please note “no
entry”. No journal entry descriptions are required. A sample chart of accounts is available in
eClass. Please consider each transaction as independent, unless otherwise noted.
Transaction - Please consider each transaction as independent, unless otherwise noted.
1. Purchased a computer for $2,200 on credit (on account).
2. Declared and paid cash dividends of $600 to shareholders.
3. Signed a rental contract for $850 per month. The rental term starts one month from now.
4. Received cash of $750 for services to be provided next month.
5. Paid the $250 telephone bill for the current month.
Journal Entries, page 2 – Please upload this as question 3
Transaction - Please consider each transaction as independent, unless otherwise noted.
6. Purchased office equipment (desk and chair) for $1,500 paying cash of $500 and the
remainder on account.
7. Invoiced customers for services provided of $20,000.
8. Received $1,000 cash on account (received $1,000 of the $20,000 invoiced in #7).
9. Paid $2,200 on account (Paid for the computer purchased in #1).
10. Purchased a building for $500,000 by signing a bank loan.
