Part A Complete Problem 2-69 parts B-E on page 92 in the textbook. 1. Determine the impact of the eleven transactions on the financial statement equation (part B) 2. Considering the beginning balances given in the problem as well as the impact of the transactions, create the January income statement (part C), January statement of stockholders equity (part D), and balance sheet as of January 31, 2015 (part E).

Part B Accounts from Max Companys 12/31/18 adjusted pre-closing trial balance appear below: Accounts Payable 10,000 Accounts Receivable 22,500 Accumulated Depreciation - Equipment 43,000 Allowance for Doubtful Accounts 3,000 Bad Debt Expense 1,100 Bonds Payable (due 12/31/20) 53,000 Cash 31,800 Common Stock 42,200 Cost of Goods Sold 97,000 Depreciation Expense 2,300 Equipment 122,900 Interest Expense 3,800 Merchandise Inventory 39,000 Prepaid Rent 7,100 Rent Expense 15,800 Retained Earnings (beginning balance) 18,000 Salaries and Wage Expense 55,100 Salaries Payable 4,200 Sales Revenue 225,000 First classify the accounts above (asset, liability, equity, revenue, expense). Then calculate net income and determine the ending balance of retained earnings. Finally prepare a classified balance sheet (current vs long term) using the information above. Using balance sheet, answer the questions below. 1. What is the total amount reported as Current Assets as of 12/31/18? 2. What is the total amount reported as Total Liabilities as of 12/31/18? 3. What is the total amount report as Total Stockholders Equity as of 12/31/18? 4. Calculate the Debt to Equity ratio as of 12/31/18 and briefly discuss what this means. 5. Calculate the Current Ratio as of 12/31/18 and briefly discuss what this means.

P2-69. Analyzing Transactions Using the Financial Statement Effects Template and Preparing

Financial Statements

Kross, Inc., provides appraisals and feasibility studies. On January 1, 2015, its beginning account

Balances are as follows: Cash, $6,700; Accounts Receivable, $14,800; Notes Payable, $2,500;

Accounts Payable, $600; Retained Earnings, $12,400; and Common Stock, $6,000. The following

Transactions occurred during January, and company accounts include the following: Cash, Accounts

Receivable, Vehicles, Accounts Payable, Notes Payable, Services Revenue, Rent Expense, Interest

Expense, Salary Expense, Utilities Expense, Common Stock, and Retained Earnings.

1. Paid $950 cash for January rent.

2. Received $8,800 cash on customers accounts.

3. Paid $500 cash toward accounts payable.

4. Received $1,600 cash for services performed for customers.

5. Borrowed $5,000 cash from bank and signed note payable for that amount.

6. Billed the city $6,200 for services performed, and billed other credit customers for $1,900 in

Services.

7. Paid $4,000 cash for salary of assistant.

8. Received $410 invoice for January utilities expense.

9. Declared and paid a $6,000 cash dividend.

10. Paid $9,800 cash to acquire a vehicle (on January 31) for business use.

11. Paid $50 cash to bank for January interest on notes payable.

REQUIRED

a. Using the financial statement effects template, enter January 1 beginning amounts in the ap-

propriate columns of the rst row. (Hint: Beginning balances for columns can include amounts

From more than one account.)

b. Report the effects for each of the separate transactions 1 through 11 in the Financial statement

Effects template set up in part a. Total all columns and prove that (1) assets equal liabilities

Plus equity at January 31, and (2) revenues less expenses equal net income for January.

c. Prepare its income statement for January 2015.

d. Prepare its statement of stockholders equity for January 2015.

e. Prepare its balance sheet at January 31, 2015.