Kathys Cleaning Services has been operating for 5 years. At December 31 of last year, the accounting records post closing trial balance reflected the following: Assets Amount Liabilities & Equity Amount Cash $ 45,000 Accounts Payable $ 23,000 Marketable Securities 15,000 Notes Payable (Short-Term) 50,000 Accounts Receivable 20,000 Long Term Notes Payable 90,000 Equipment 100,000 Common Stock 40,000 Factory 210,000 Additional Paid in Capital 10,000 Intangibles 23,000 Retained Earnings 200,000 Total Assets $413,000 Total Liabilities & Equity $413,000 During the current year, the company had the following summarized activities:

a. Purchased furniture for $20,000 cash.

b. Purchase supplies on account for $7,000.

c. Purchased equipment that cost a total of $55,000; paid $5,000 cash and signed a one-year note for the balance.

d. Hired a new president at the end of the year. The contract was for $95,000 per year plus options to purchase company stock at a set price based on company performance.

e. Issued additional shares of common stock for $20,000 cash and $80,000 in machinery.

f. Purchased a new vehicle for $60,000 by putting down $10,000 cash and obtained a five year note payable from a local bank.

g. Purchased Land for $15,000 cash.

h. Performed Services for customers and received $82,500 cash.

i. Built an addition to the factory for a total cost of $90,000; paid $5,000 in cash and signed a three-year note for the balance.

j. Performed services for a customers on account for $52,500.

k. Paid $16,000 on account payable.

l. Received $40,000 from customers on account.

m. Paid expenses: Rent-$14,500, Advertising-$4,000 and Salaries-$28,000

n. Paid dividends $10,500.

Hints 1. Follow the accounting cycle

2. Use the existing accounts and open new accounts when needed. See chapter 2 for accounts!

3. When doing ratios-show the ratio formula, show the numbers you are using, then make sure you compute 2-4 ratios and provide an analysis for each ratio.

Required 1. Create a journal entry for each transaction.

2. Then post to T accounts.

3. Prepare a trial balance as of December 31 of the current year.

4. Prepare an Income Statement of December 31 of the current year.

5. Prepare a Statement of Retained Earnings as of December 31, of the current year.

6. Prepare a Balance Sheet as of December 31, of the current year.

7. Analyze the financial status of the company over this last year. (Dont forget to use at least two to four ratios in your written analysis!