Corporate Bridge Case Study Dheeraj Vaidya (dheerajvaidya@corporatebridge.

net)

INCOME STATEMENT
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.

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

BALANCE SHEET ITEMS

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.

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

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)

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

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.

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

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.

Questions
1. Make your Balance Sheet as of December 4th ,2007 (remember, it will include cases
5,6,7 and 8)

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

1. Make your Balance Sheet as of December 4th ,2007 (remember, it will include cases
5,6,7 and 8)

FINAL QUESTIONS

1. Income Statement from 1st December-31st December

2. Balance Sheet as of 31st December
3. Cash Flows from 1st December to 31st December
SAMPLE INCOME STATEMENT
FastTrack Movers & Packers Inc.
Income Statement, for year ended 31st December, 2007
Sales
Cost of goods sold
Gross Profit
Selling,general and admin. expenses
Income from operations
Interest expense
Income before taxes
Net Income

$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx

Earnings per share

$ xxx

SAMPLE BALANCE SHEET

FastTrack Movers & Packers Inc
Balance Sheet, December 1st 2007
Assets
Cash

$20,000

Liabilities & Stockholder's Equity

Liabilities
Stockholder's Equity
Common Stock

Total Assets

$20,000

$0

$20,000
$20,000