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The Garden Place case is designed to facilitate a review of basic account relationships the the preparation of financial statements. Excel is not exactly an ideal medium for doing this sort of problem, but I suggest setting up a matrix of account titles [column A] and transaction descriptions [row 1]. Here is what my initial entry looks like. Each entry takes a separate column, using appropriate signs for debits and credits. This makes it easy to total up the amounts for each account to get the balance sheet and income statements as required. See the instructions below.

Please IGNORE the instructions at the bottom of page 2 of the case and proceed as follows:

1. Set up your spreadsheet as illustrated above and record transactions 1 through 7.
2. Transactions 1 through 7 represent the things that Mary Jane will do BEFORE she opens the door on April 1, 2006. Use the next available column in your worksheet to prepare a balance sheet as of the start of business on April 1.
3. Use additional columns to accumulate the amounts for the transactions that are anticipated during the first year of operations.
4. Prepare a projected income statement for the year ended 3/31/07 and a projected balance sheet as of 3/31/07.
5. Calculate MJ's breakeven point.
6. What additional information will MJ need in order to prepare the "real" financial statements on 3/31/07?

Print your worksheet. Be sure to repeat the row titles from column A on each page. [Don't re-enter them; just include them in the printed output as repeated columns.]

Note: SAVE your Excel worksheet where you can find it later in the semester. We will use it to complete the transactions for the business after its first year of operations. See below.

The Garden Place One Year Later

Overview of this assignment: The Garden Place One year Later provides a summary of the transactions for the business during its first year of operation. Use your Excel worksheet from the first Garden Place assignment. Use adjacent columns in your worksheet to prepare a summary of cash receipts and disbursements, an income statement and a balance sheet. Then prepare a one-page report for Mary Jane in which you summarize how the business performed during its first year. What went well? Not so well? Budgeted net income was $9,940. Was actual net income higher or lower? Why? You cannot do a detailed variance analysis because you don't have enough information, but you CAN identify basic variances and determine the fundamental reasons that the Garden Place's net income differed from plan. What about other performance statistics? Mary Jane wants a comprehensive but concise report. Use bullet points and be very specific.

Before you start entering the "actual" transactions for the year, proceed as follows:

1. Make a copy of your original Garden Place worksheet in the same Excel workbook. Rename the new worksheet so that you will know what it is [e.g., GP2].
2. In this second worksheet, DELETE all of the PROSPECTIVE entries that you made to set up the plan for the year. These include the sales, purchases of inventory, repayment of debt, and operating expenses. Also remove the entry for the 32,000 loan. You should be left with a balance sheet that looks like this:

3. Now use the columns to the right of the balance sheet to make the entries for the year. Pay special attention to items 4 and 12. For item #4, the author assumes that the impact of the loss on the dead plants and the gain in inventory due to cross pollination is implicit in the value of the remaining inventory. No separate entries for the dead plants and cross pollination are required. Read item #12 carefully. It's a bit subtle, but the implication is that $40,000 HAS been collected.
4. When you get to the point where you want to calculate the variances, cell reference the original income statement into the new worksheet you created in step 1. The simply replicate the new income statement beside the original.

Submission details:

Complete this in groups of TWO. Hand in one copy of your report and email me ONE file, as directed below.

Hard copy of your one-page report due at the beginning of class.
Email your Excel file no later than 1:00 pm, PDT on March 25th, 2009. Subject line is Garden Place. Excel filename is yourllastnamegarden.xls. Do NOT email your one-page report.

Copyright © 2010 Gerald M. Myers
Last modified: 1/31/2011; 17:24