Corporate Bridge Case Study Dheeraj Vaidya (dheerajvaidya@corporatebridge.

net)

INCOME STATEMENT




Questions
1. Make the Income statement for the month from 1
st
-31
st
December.

Case 1: Revenues
If Kartik delivers 200 parcels in December for $5 per delivery, he has technically earned fees totaling
$1,000 for that month. He sends invoices to his clients for these fees and his terms require that his
clients must pay by January 15
Case 2: Revenues
When Kartik receives the $1,000 worth of payment checks from his customers on January 15, he will
make an accounting entry to show the money was received.
Case 3: Expenses
If Kartik hires some labor to help him with December deliveries and Kartik agrees to pay him $300 on
January 3 and another $100 for pakaging and other supporting material; Total expenses of $400
expense for December deliveries
Case 4: Expenses
FastTrack Movers and Packers borrowed $20,000 from a bank to start his business on 1st December
and the company agrees to pay 5% in interest, or $1,000. The interest is to be paid in a lump sum on
December 1st of each year.
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BALANCE SHEET ITEMS

Questions
1. Make your Balance Sheet as of December 1
st
,2007


Questions
1. Make your Balance Sheet as of December 2
nd
,2007 (remember, it will include
transactions that happened on 1
st
December)


Questions
1. Make your Balance Sheet as of December 2
nd
,2007 (remember, it will include
transactions that happened on 1
st
December and also case study 6)


Questions
1. Make your Balance Sheet as of December 4
th
,2007 (remember, it will include cases
5,6,7 and 8)
Case 5: Cash and Common Stock
On December 1, 2007 Kartik starts his business FastTrack Movers and Packers. The first transaction that
Kartik will record for his company is his personal investment of $20,000 in exchange for 5,000 shares of
FastTrack Movers & Packers common stock. There are no revenues because no delivery fees were earned
by the company, and there were no expenses.
Case 6: Purchase of Vehicle
On December 2, FastTrack Movers & Packers purchases a truck for $14,000 by writing a check for $14,000.
The two accounts involved are Cash and Vehicles (or Delivery Truck)
Case 7: Prepaid Expenses
On December 2 when Kartik contacts an insurance agent regarding insurance coverage for the Truck just
purchased. The agent informs him that $1,200 will provide insurance protection for the next one year.
Kartik immediately writes a check for $1,200.
Case 8: Inventory
Kartik keeps an inventory of packing boxes not only to use it for his business but also earn additional
revenues by carrying an inventory of packing boxes to sell. Let's say that FastTrack Movers and Packers
purchased 1,000 boxes wholesale for $1.00 each.
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1. Make your Balance Sheet as of December 4
th
,2007 (remember, it will include cases
5,6,7 and 8)

FINAL QUESTIONS
1. Income Statement from 1
st
December-31
st
December
2. Balance Sheet as of 31
st
December
3. Cash Flows from 1
st
December to 31
st
December
SAMPLE INCOME STATEMENT

SAMPLE BALANCE SHEET

Case 9: Unearned Revenues
In addition to 200 parcels delivered by FastTrack Movers and Packers in December, they enters into an
agreement with one of its customers stipulating that the customer prepays $600 in return for the delivery
of 30 parcels every month for 6 months. Assume FastTrack Movers & Packers receives $600 payment on
Dec 1,2007 for deliveries to be made between Dec 1,2007 and May 31,2007
FastTrack Movers & Packers Inc.
Sales $ xxx
Cost of goods sold $ xxx
Gross Profit $ xxx
Selling,general and admin. expenses $ xxx
Income from operations $ xxx
Interest expense $ xxx
Income before taxes $ xxx
Net Income $ xxx
Earnings per share $ xxx
Income Statement, for year ended 31st December, 2007
Assets Liabilities & Stockholder's Equity
Cash $20,000 Liabilities $0
Stockholder's Equity
Common Stock $20,000
Total Assets $20,000 $20,000
FastTrack Movers & Packers Inc
Balance Sheet, December 1st 2007
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