Scenario You are an accountant at Rock Castle Construction Your boss has asked that you create general purpose financial statements from a trial balance that he has created for you Additionally, the company is for sale and you need to draft a letter to potential buyers explaining the overall financial health and profitability of the business You should use several appropriate financial measure formulas as evidence (hint we covered a few of the many possible formulas in discussion posts) Your boss has strongly reminded you that the company needs to sell or you may be out of a job You have been strongly encouraged to write a very positive letter to potential buyers Generally, buyers are most interested in knowing about profits Required 1 )Create the four general purpose financial statements for the year ended Dec 31, 2019 i e Income statement, Balance Sheet, Statement of Owners Equity Retained Earnings, Statement of Cash Flows 2 )Write a letter to potential buyers Dec 31, 19 Debit Credit 10300 Savings 17,910 19 10100 Checking 35,068 48 10400 Petty Cash 755 05 11000 Accounts Receivable 92,707 93 12000 Undeposited Funds 2,440 00 12100 Inventory Asset 30,683 38 12800 Employee Advances 832 00 13100 Pre paid Insurance 4,050 00 13400 Retainage Receivable 3,703 02 1600 scooter 4,000 00 15000 Furniture and Equipment 34,326 00 15100 Vehicles 78,936 91 15200 Buildings and Improvements 325,000 00 15300 Construction Equipment 15,300 00 16900 Land 90,000 00 17000 Accumulated Depreciation 110,344 60 18700 Security Deposits 1,720 00 20000 Accounts Payable 15,536 30 20500 QuickBooks Credit Card 150,094 20 20600 CalOil Credit Card 382 62 24000 Payroll Liabilities 24010 Federal Withholding 1,364 00 24000 Payroll Liabilities 24020 FICA Payable 2,118 82 24000 Payroll Liabilities 24030 AEIC Payable 0 00 24000 Payroll Liabilities 24040 FUTA Payable 100 00 24000 Payroll Liabilities 24050 State Withholding 299 19 24000 Payroll Liabilities 24060 SUTA Payable 110 00 24000 Payroll Liabilities 24070 State Disability Payable 48 13 24000 Payroll Liabilities 24080 Worker's Compensation 1,214 31 24000 Payroll Liabilities 24100 Emp Health Ins Payable 150 00 25500 Sales Tax Payable 957 63 2600 Scooter Loan 4,000 00 23000 Loan Vehicles (Van) 10,501 47 23100 Loan Vehicles (Utility Truck) 19,936 91 23200 Loan Vehicles (Pickup Truck) 22,641 00 28100 Loan Construction Equipment 13,911 32 28200 Loan Furniture Office Equip 21,000 00 28700 Note Payable Bank of Anycity 2,693 21 28900 Mortgage Office Building 296,283 00 30100 Capital Stock 39,273 75 32000 Retained Earnings 61,756 76 40100 Construction Income 0 00 40100 Construction Income 40110 Design Income 36,729 25 40100 Construction Income 40130 Labor Income 208,225 42 40100 Construction Income 40140 Materials Income 119,920 67 40100 Construction Income 40150 Subcontracted Labor Income 82,710 35 40100 Construction Income 40199 Less Discounts given 48 35 40500 Reimbursement Income 40520 Permit Reimbursement Income 1,223 75 40500 Reimbursement Income 40530 Reimbursed Freight Delivery 896 05 50100 Cost of Goods Sold 14,766 19 54000 Job Expenses 54200 Equipment Rental 1,850 00 54000 Job Expenses 54300 Job Materials 99,435 90 54000 Job Expenses 54400 Permits and Licenses 700 00 54000 Job Expenses 54500 Subcontractors 63,217 95 54000 Job Expenses 54520 Freight Delivery 797 10 54000 Job Expenses 54599 Less Discounts Taken 201 81 food 44 95 60100 Automobile 60110 Fuel 1,588 70 60100 Automobile 60120 Insurance 2,850 24 60100 Automobile 60130 Repairs and Maintenance 2,406 00 60300 Bad debt 300 00 60600 Bank Service Charges 125 00 62100 Insurance 62110 Disability Insurance 582 06 62100 Insurance 62120 Liability Insurance 5,885 96 62100 Insurance 62130 Work Comp 13,657 07 62400 Interest Expense 62420 Loan Interest 151,995 65 62700 Payroll Expenses 62710 Gross Wages 110,400 10 62700 Payroll Expenses 62720 Payroll Taxes 8,445 61 62700 Payroll Expenses 62730 FUTA Expense 268 00 62700 Payroll Expenses 62740 SUTA Expense 1,233 50 63100 Postage 104 20 63600 Professional Fees 63610 Accounting 250 00 64200 Repairs 64210 Building Repairs 175 00 64200 Repairs 64220 Computer Repairs 0 00 64200 Repairs 64230 Equipment Repairs 1,350 00 64800 Tools and Machinery 2,820 68 65100 Utilities 65110 Gas and Electric 1,164 16 65100 Utilities 65120 Telephone 841 15 65100 Utilities 65130 Water 264 00 70100 Other Income 146 80 70200 Interest Income 229 16 Total 1,225,000 48 1,225,000 48 Dec 31, 18 Debit Credit 10300 Savings 15,881 03 10100 Checking 36,810 16 10400 Petty Cash 500 00 11000 Accounts Receivable 21,249 39 12000 Undeposited Funds 18,252 08 12100 Inventory Asset 12,767 04 12800 Employee Advances 770 00 13100 Pre paid Insurance 4,943 02 13400 Retainage Receivable 1,796 72 15000 Furniture and Equipment 22,826 00 15100 Vehicles 78,936 91 15200 Buildings and Improvements 325,000 00 15300 Construction Equipment 15,300 00 16900 Land 90,000 00 17000 Accumulated Depreciation 110,344 60 18700 Security Deposits 1,720 00 20000 Accounts Payable 13,100 00 20500 QuickBooks Credit Card 0 00 20600 CalOil Credit Card 530 00 24000 Payroll Liabilities 24010 Federal Withholding 0 00 24000 Payroll Liabilities 24020 FICA Payable 0 00 24000 Payroll Liabilities 24040 FUTA Payable 0 00 24000 Payroll Liabilities 24050 State Withholding 0 00 24000 Payroll Liabilities 24060 SUTA Payable 0 00 24000 Payroll Liabilities 24070 State Disability Payable 0 00 24000 Payroll Liabilities 24080 Worker's Compensation 0 00 25500 Sales Tax Payable 72 18 23000 Loan Vehicles (Van) 16,290 52 23100 Loan Vehicles (Utility Truck) 19,936 91 23200 Loan Vehicles (Pickup Truck) 22,641 00 28100 Loan Construction Equipment 14,343 11 28200 Loan Furniture Office Equip 21,000 00 28700 Note Payable Bank of Anycity 31,180 52 28900 Mortgage Office Building 296,283 00 30100 Capital Stock 39,273 75 32000 Retained Earnings 36,213 97 40100 Construction Income 40110 Design Income 3,400 00 40100 Construction Income 40130 Labor Income 16,335 00 40100 Construction Income 40140 Materials Income 36,023 77 40100 Construction Income 40150 Subcontracted Labor Income 112,666 50 40500 Reimbursement Income 40520 Permit Reimbursement Income 835 00 50100 Cost of Goods Sold 5,620 96 54000 Job Expenses 54300 Job Materials 12,171 60 54000 Job Expenses 54400 Permits and Licenses 225 00 54000 Job Expenses 54500 Subcontractors 53,350 00 60100 Automobile 60110 Fuel 1,715 00 60100 Automobile 60120 Insurance 2,850 24 60100 Automobile 60130 Repairs and Maintenance 2,550 00 60600 Bank Service Charges 150 00 60900 Depreciation Expense 44,435 91 62100 Insurance 62110 Disability Insurance 600 00 62100 Insurance 62120 Liability Insurance 5,092 98 62100 Insurance 62130 Work Comp 3,300 00 62400 Interest Expense 62420 Loan Interest 4,705 48 63600 Professional Fees 63610 Accounting 250 00 64200 Repairs 64220 Computer Repairs 714 00 64200 Repairs 64230 Equipment Repairs 1,800 00 64800 Tools and Machinery 1,457 91 65100 Utilities 65110 Gas and Electric 1,841 43 65100 Utilities 65120 Telephone 880 00 65100 Utilities 65130 Water 288 00 70200 Interest Income 281 03 Total 790,750 86 790,750 86

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Dec 11, 2021

Scenario: You are an accountant at Rock Castle Construction. Your boss has asked that you create general purpose financial statements from a trial balance that

Scenario:
You are an accountant at Rock Castle Construction. Your boss has asked that you create general purpose financial statements from a trial balance that he has created for you. Additionally, the company is for sale and you need to draft a letter to potential buyers explaining the overall financial health and profitability of the business. You should use several appropriate financial measure formulas as evidence (hint: we covered a few of the many possible formulas in discussion posts). Your boss has strongly reminded you that the company needs to sell or you may be out of a job. You have been strongly encouraged to write a very positive letter to potential buyers. Generally, buyers are most interested in knowing about profits.
Required:
1.)Create the four general purpose financial statements for the year ended Dec 31, 2019 i.e. Income statement, Balance Sheet, Statement of Owners Equity/Retained Earnings, Statement of Cash Flows.
2.)Write a letter to potential buyers.

	Dec 31, 19
	Debit	Credit
10300 · Savings	17,910.19
10100 · Checking	35,068.48
10400 · Petty Cash	755.05
11000 · Accounts Receivable	92,707.93
12000 · Undeposited Funds	2,440.00
12100 · Inventory Asset	30,683.38
12800 · Employee Advances	832.00
13100 · Pre-paid Insurance	4,050.00
13400 · Retainage Receivable	3,703.02
1600 · scooter	4,000.00
15000 · Furniture and Equipment	34,326.00
15100 · Vehicles	78,936.91
15200 · Buildings and Improvements	325,000.00
15300 · Construction Equipment	15,300.00
16900 · Land	90,000.00
17000 · Accumulated Depreciation		110,344.60
18700 · Security Deposits	1,720.00
20000 · Accounts Payable		15,536.30
20500 · QuickBooks Credit Card		150,094.20
20600 · CalOil Credit Card		382.62
24000 · Payroll Liabilities:24010 · Federal Withholding		1,364.00
24000 · Payroll Liabilities:24020 · FICA Payable		2,118.82
24000 · Payroll Liabilities:24030 · AEIC Payable	0.00
24000 · Payroll Liabilities:24040 · FUTA Payable		100.00
24000 · Payroll Liabilities:24050 · State Withholding		299.19
24000 · Payroll Liabilities:24060 · SUTA Payable		110.00
24000 · Payroll Liabilities:24070 · State Disability Payable		48.13
24000 · Payroll Liabilities:24080 · Worker's Compensation		1,214.31
24000 · Payroll Liabilities:24100 · Emp. Health Ins Payable		150.00
25500 · Sales Tax Payable		957.63
2600 · Scooter Loan		4,000.00
23000 · Loan - Vehicles (Van)		10,501.47
23100 · Loan - Vehicles (Utility Truck)		19,936.91
23200 · Loan - Vehicles (Pickup Truck)		22,641.00
28100 · Loan - Construction Equipment		13,911.32
28200 · Loan - Furniture/Office Equip		21,000.00
28700 · Note Payable - Bank of Anycity		2,693.21
28900 · Mortgage - Office Building		296,283.00
30100 · Capital Stock		39,273.75
32000 · Retained Earnings		61,756.76
40100 · Construction Income	0.00
40100 · Construction Income:40110 · Design Income		36,729.25
40100 · Construction Income:40130 · Labor Income		208,225.42
40100 · Construction Income:40140 · Materials Income		119,920.67
40100 · Construction Income:40150 · Subcontracted Labor Income		82,710.35
40100 · Construction Income:40199 · Less Discounts given	48.35
40500 · Reimbursement Income:40520 · Permit Reimbursement Income		1,223.75
40500 · Reimbursement Income:40530 · Reimbursed Freight & Delivery		896.05
50100 · Cost of Goods Sold	14,766.19
54000 · Job Expenses:54200 · Equipment Rental	1,850.00
54000 · Job Expenses:54300 · Job Materials	99,435.90
54000 · Job Expenses:54400 · Permits and Licenses	700.00
54000 · Job Expenses:54500 · Subcontractors	63,217.95
54000 · Job Expenses:54520 · Freight & Delivery	797.10
54000 · Job Expenses:54599 · Less Discounts Taken		201.81
food	44.95
60100 · Automobile:60110 · Fuel	1,588.70
60100 · Automobile:60120 · Insurance	2,850.24
60100 · Automobile:60130 · Repairs and Maintenance	2,406.00
60300 · Bad debt	300.00
60600 · Bank Service Charges	125.00
62100 · Insurance:62110 · Disability Insurance	582.06
62100 · Insurance:62120 · Liability Insurance	5,885.96
62100 · Insurance:62130 · Work Comp	13,657.07
62400 · Interest Expense:62420 · Loan Interest	151,995.65
62700 · Payroll Expenses:62710 · Gross Wages	110,400.10
62700 · Payroll Expenses:62720 · Payroll Taxes	8,445.61
62700 · Payroll Expenses:62730 · FUTA Expense	268.00
62700 · Payroll Expenses:62740 · SUTA Expense	1,233.50
63100 · Postage	104.20
63600 · Professional Fees:63610 · Accounting	250.00
64200 · Repairs:64210 · Building Repairs	175.00
64200 · Repairs:64220 · Computer Repairs	0.00
64200 · Repairs:64230 · Equipment Repairs	1,350.00
64800 · Tools and Machinery	2,820.68
65100 · Utilities:65110 · Gas and Electric	1,164.16
65100 · Utilities:65120 · Telephone	841.15
65100 · Utilities:65130 · Water	264.00
70100 · Other Income		146.80
70200 · Interest Income		229.16
Total	1,225,000.48	1,225,000.48

	Dec 31, 18
	Debit	Credit
10300 · Savings	15,881.03
10100 · Checking	36,810.16
10400 · Petty Cash	500.00
11000 · Accounts Receivable	21,249.39
12000 · Undeposited Funds	18,252.08
12100 · Inventory Asset	12,767.04
12800 · Employee Advances	770.00
13100 · Pre-paid Insurance	4,943.02
13400 · Retainage Receivable	1,796.72
15000 · Furniture and Equipment	22,826.00
15100 · Vehicles	78,936.91
15200 · Buildings and Improvements	325,000.00
15300 · Construction Equipment	15,300.00
16900 · Land	90,000.00
17000 · Accumulated Depreciation		110,344.60
18700 · Security Deposits	1,720.00
20000 · Accounts Payable		13,100.00
20500 · QuickBooks Credit Card	0.00
20600 · CalOil Credit Card		530.00
24000 · Payroll Liabilities:24010 · Federal Withholding	0.00
24000 · Payroll Liabilities:24020 · FICA Payable	0.00
24000 · Payroll Liabilities:24040 · FUTA Payable	0.00
24000 · Payroll Liabilities:24050 · State Withholding	0.00
24000 · Payroll Liabilities:24060 · SUTA Payable	0.00
24000 · Payroll Liabilities:24070 · State Disability Payable	0.00
24000 · Payroll Liabilities:24080 · Worker's Compensation	0.00
25500 · Sales Tax Payable		72.18
23000 · Loan - Vehicles (Van)		16,290.52
23100 · Loan - Vehicles (Utility Truck)		19,936.91
23200 · Loan - Vehicles (Pickup Truck)		22,641.00
28100 · Loan - Construction Equipment		14,343.11
28200 · Loan - Furniture/Office Equip		21,000.00
28700 · Note Payable - Bank of Anycity		31,180.52
28900 · Mortgage - Office Building		296,283.00
30100 · Capital Stock		39,273.75
32000 · Retained Earnings		36,213.97
40100 · Construction Income:40110 · Design Income		3,400.00
40100 · Construction Income:40130 · Labor Income		16,335.00
40100 · Construction Income:40140 · Materials Income		36,023.77
40100 · Construction Income:40150 · Subcontracted Labor Income		112,666.50
40500 · Reimbursement Income:40520 · Permit Reimbursement Income		835.00
50100 · Cost of Goods Sold	5,620.96
54000 · Job Expenses:54300 · Job Materials	12,171.60
54000 · Job Expenses:54400 · Permits and Licenses	225.00
54000 · Job Expenses:54500 · Subcontractors	53,350.00
60100 · Automobile:60110 · Fuel	1,715.00
60100 · Automobile:60120 · Insurance	2,850.24
60100 · Automobile:60130 · Repairs and Maintenance	2,550.00
60600 · Bank Service Charges	150.00
60900 · Depreciation Expense	44,435.91
62100 · Insurance:62110 · Disability Insurance	600.00
62100 · Insurance:62120 · Liability Insurance	5,092.98
62100 · Insurance:62130 · Work Comp	3,300.00
62400 · Interest Expense:62420 · Loan Interest	4,705.48
63600 · Professional Fees:63610 · Accounting	250.00
64200 · Repairs:64220 · Computer Repairs	714.00
64200 · Repairs:64230 · Equipment Repairs	1,800.00
64800 · Tools and Machinery	1,457.91
65100 · Utilities:65110 · Gas and Electric	1,841.43
65100 · Utilities:65120 · Telephone	880.00
65100 · Utilities:65130 · Water	288.00
70200 · Interest Income		281.03
Total	790,750.86	790,750.86

Step by Step Solution

★★★★★

3.49 Rating (162 Votes )

There are 3 Steps involved in it

Step: 1

To address the requirements Ill guide you through the steps necessary to create each of the four generalpurpose financial statements from the provided trial balance for the year ended December 31 2019 ... blur-text-image