Question
Rose and Budd, Inc. is a closely held corporation that owns a small roadside motel in a rural area. In prior years, the motel has
Rose and Budd, Inc. is a closely held corporation that owns a small roadside motel in a rural area. In prior years, the motel has struggled to be financially viable. In 2020, Rose and Budd, Inc. accepted additional capital investments from shareholders, changed certain aspects of its operating strategy (relating to advertising and employee compensation), and undertook significant capital improvements. Specifically, the corporation
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Issued additional stock for $200,000 cash.
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Invested in long-lived improvements of $75,000 to improve energy efficiency and the
appearance of the motel (these improvements were properly recorded in the Buildings
account).
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Retired fully depreciated furniture and fixtures amounting to $64,500 and purchased new
furniture and fixtures of $229,500.
The adjusted trial balances for Rose and Budd, Inc. for 2019 and 2020 are presented on the next page. This is the typical form in which Rose and Budd receives information for each period.
You have been asked to prepare a workbook to help facilitate preparation of the financial statements for Rose and Budd, Inc. for 2019 and 2020. Rose and Budd would like to continue to use this workbook to prepare financials statements and analysis in future periods, so be sure to structure your worksheets so it is clear how information from the trial balance should be entered.
Your workbook should contain the following worksheets at a minimum:
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Trial balances (for 2019 and 2020)
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Income statements (for 2019 and 2020)
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Balance sheets (for 2019 and 2020)
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Statement of Cash flows (for 2020)
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Analysis (charts presenting relative operational performance changes from 2019 to 2020)
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Techniques used
The trial balances are your primary data for the financial statements. With the exception of statement headings (e.g. Rose and Budd, Inc., Income Statements, For the Years Ended September 30) and sub- headings (e.g. Current Assets), no hard coding may take place beyond the first worksheet. That is, each statement must be prepared by referencing the trial balances or intermediate calculations. If you would like to do so, you may add additional worksheets to assist with your work.
In your analysis worksheet, you should present relevant charts to help management to better understand key changes in operational performance across the periods presented. You should NOT present information related to all items as some are relatively unchanged by the renovations and operational updates.
For full credit, you must include at least one technique from each lesson completed in MyEducator. Along with your completed workbook, submit a listing explaining which technique was used from each
lesson (e.g. Lesson 1: In the financial statements worksheets, I centered statement headings and changed the number type to accounting).
Rose and Budd, Inc. | ||
Trial Balances | ||
For the Years Ending 2020 and 2019 | ||
dr (cr) | ||
Account | 2020 | 2019 |
Accounts Payable | $ (17,000) | $ (14,000) |
Accounts Receivable | 8,000 | 6,000 |
Accumulated Depreciation | (151,000) | (178,500) |
Advertising Expense | 12,000 | 5,000 |
Buildings | 700,000 | 625,000 |
Cash | 57,000 | 21,000 |
Common Stock | (867,000) | (667,000) |
Depreciation Expense | 37,000 | 22,500 |
Furniture and Fixtures | 275,000 | 110,000 |
Insurance Expense | 53,000 | 20,000 |
Land | 140,000 | 140,000 |
Prepaid Insurance | 5,000 | 4,500 |
Repairs and Maintenance Expense | 35,000 | 215,000 |
Retained Earnings | (187,500) | (187,500) |
Sales | (487,000) | (425,000) |
Supplies | 7,000 | 2,500 |
Supplies Expense | 14,000 | 10,000 |
Utilities Expense | 148,000 | 222,000 |
Wages Expense | 80,000 | 71,000 |
Wages Payable | (2,000) | (2,500) |
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