Survey of Accounting Packet 21 Semester Case - Cowboy lce Cream, Inc. (ClC) Today we are going to revisit earlier packets in order to fie our financials together. Think back to packet 19 when you found yourself with negative Retained Eamings. What questions were raised when you saw that? What might have been missing from the information to which you had access? It didn't see like you had access to all of the transactions, right? Now you do. Use the following pages to record entries in your accounting equation and income statement. Then use that information to create a full set of financial statements for ClC to close out Year 2. This packet is an excellent review for Exam 3 and the Final Exam. Beginning Balances for Year 2 were as follows: or each of the below transactions, 1. Record the transactions in the appropriate general ledger accounts under an accounting equation. Record the amounts of revenue and expense in the Retained Earnings column, as well as the income statement columns. 2. Prepare the income statement and balance sheet for the year 2 activity. Compare this balance sheet to the pro-forma version you created in packet 18. What is similar and what is different. Discuss amongst your peers how you would explain the differences in the pro-forma and actual balance sheets. During Year 2, the business experienced the following events. 1. Signed a note with the bank in exchange for $800,000 cash. 2. Purchased Land, a Building \& remodeled the building for the following amounts: Land = $281,250; Building + Remodel =$438,750 3. Purchased and installed freezer $4,289 4. In the prior year, ClC sold a parcel of land and received in return cash and a note receivable of $10,000, due January 31, Year 2. The note carries interest at the rate of 8%. $733 of interest was recorded as of Dec 31 , year 1 . Record the remaining interest due and receipt of interest from the note receivable. 5. Recorded purchase of 6,000 units of ice cream at $4.50 each, on account. 6. Recorded sale of 5,500 units of ice cream at $8.00 each, on account. 7. Sold 6,000 shares of the $1 par common stock for $10 per share. 8. Sold 4,000 shares of the 6 percent preferred stock for $150 per share. 9. Recorded purchase of 5,000 units of ice cream at $5.00 each, on account. 10. Recorded sale of 4,750 units of ice cream at $8.00 each, on account. 11. Recorded cash payment of the storage and delivery bill for July-Dec, $7,800. 12. Recorded cash payment to W.T. for wages for July-Dec of $3,000. 13. Recorded receipt of $45,000 from customers on account. 14. Recorded payment to the manufacturer of $28,000 of the amount owed. 15. Completed a consulting job with My Assistant's new owners to help with year end financials in exchange for $25,000 \& a consulting job with a company similar to My Assistant as a startup venture in exchange for $25,000. 16. Declared a $0.50 per share dividend on the common stock. There were 15,000 shares in beginning common stock. 17. Declared cash dividend on the outstanding shares of preferred stock for the year 18. Paid dividends owed to stockholders of record on December 10. 19. Record depreciation on building (see packet XX for details) 20. Record depreciation on truck with a salvage value of $8,750 and a useful life of 5 years 21. Record depreciation on freezer (equipment - see packet XX for details) \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline \multirow{3}{*}{ Events } & \multicolumn{10}{|c|}{ Balance Sheet } \\ \hline & \multicolumn{10}{|c|}{ Assets } \\ \hline & Cash & AcctRec & Inv & Int Rec & Note Rec & Truck & Equip & Land & Building & Accum Depr \\ \hline Beg Balance & $26,000.00 & $12,000.00 & $6,500.00 & \begin{tabular}{ll} $ & 733.00 \end{tabular} & $10,000.00 & $50,000.00 & $ & & $ & $8.250.00 \\ \hline 1 Sign note & 806000 & & & & & & & & & \\ \hline 2 \begin{tabular}{l} Purchase land, building, \& remodel \\ buildina \end{tabular} & 826,000 & & & & & & & & & \\ \hline 3 Purchase & install freezer & 821,000 & & & & & & & & & \\ \hline 4 Record Int Received \& Note Rec Pmt & 822,000 & & & & & & & & & \\ \hline 5 Purchase of 6000 units & 794,000 & & & & & & & & & \\ \hline \begin{tabular}{|l|l|} 6a & Sale of 5500 units - record revenue \\ \end{tabular} & 838,000 & & & & & & & & & \\ \hline 6b Sale of 5500 units - record coGS & & & & & & & & & & \\ \hline 7 Sold 6,000 shares of Comm Stock & 898,000 & & & & & & & & & \\ \hline 8 Sold 4,000 shares of Pref Stock & 1490,000 & & & & & & & & & \\ \hline 9 Purchase of 5000 units & 1,46000 & & & & & & & & & \\ \hline 10a Sale of 4750 units - revenue & 1,50,000 & & & & & & & & & \\ \hline 10b Sale of 4750 units - COGS & & & & & & & & & & \\ \hline 11 Record storage \& delivery fee & 1,500,000 & & & & & & & & & \\ \hline 12 Record W.T. wages & 1,497,000 & & & & & & & & & \\ \hline 13 Record cash receipts from customers & 154900 & & & & & & & & & \\ \hline 14 Record payment to manufacturer & 15,420000 & & & & & & & & & \\ \hline 15 Consulting revenue & & & & & & & & & & \\ \hline 17 Declared dividend - common stock & & & & & & & & & & \\ \hline 22 Declared dividend - preferred stock & & & & & & & & & & \\ \hline 23 Record depreciation on building & & & & & & & & & & \\ \hline 24 Record depreciation on truck & & & & & & & & & & \\ \hline 25 Record depreciation on freezer & & & & & & & & & & \\ \hline & & & & & & & & & & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline & \multirow{3}{*}{ Events } & \multicolumn{6}{|c|}{ Balance Sheet } \\ \hline & & \multicolumn{3}{|c|}{ Liab } & \multicolumn{3}{|r|}{ Equity } \\ \hline & & Acct Payable & \begin{tabular}{l} Dividend \\ Pavable \end{tabular} & Notes Payable & C. Stock & APIC & P. Stock \\ \hline & Beg Balance & $1,500.00 & & $800000 & $15,000.00 & $60,000.00 & \\ \hline & 1 Sign note & & & & & & \\ \hline & 2 \begin{tabular}{l} Purchase land, building, \& remodel \\ buildina \end{tabular} & & & & & & \\ \hline & 3 Purchase \& install freezer & & & & & & \\ \hline & 4 Record Int Received \& Note Rec Pmt & & & & & & \\ \hline & 5 Purchase of 6000 units & & & & & & \\ \hline & Sale of 5500 units - record revenue & & & & & & \\ \hline 6b & Sale of 5500 units - record COGS & & & & & & \\ \hline & 7 Sold 6,000 shares of Comm Stock & & & & & & \\ \hline & 8 Sold 4,000 shares of Pref Stock & & & & & & \\ \hline & 9 Purchase of 5000 units & & & & & & \\ \hline 10a & Da Sale of 4750 units - revenue & & & & & & \\ \hline 10b & Db Sale of 4750 units - COGS & & & & & & \\ \hline & 11 Record storage \& delivery fee & & & & & & \\ \hline & 12 Record W.T. wages & & & & & & \\ \hline & 13 Record cash receipts from customers & & & & & & \\ \hline 14 & 14 Record payment to manufacturer & & & & & & \\ \hline 15 & 15 Consulting revenue & & & & & & \\ \hline 17 & 7 Declared dividend - common stock & & & & & & \\ \hline 22 & 2 Declared dividend - preferred stock & & & & & & \\ \hline 23 & 3 Record depreciation on building & & & & & & \\ \hline 24 & 4 Record depreciation on truck & & & & & & \\ \hline 25 & 5 Record depreciation on freezer & & & & & & \\ \hline \begin{tabular}{c} End \\ Bal \end{tabular} & & & & & & & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|} \hline & & & & & & \\ \hline \multirow{2}{*}{\multicolumn{2}{|c|}{ Events }} & \multicolumn{3}{|c|}{ Income Statement } & \multicolumn{2}{|c|}{ Statement of Cash Flows } \\ \hline & & Revenue & Expense & Net Inc & Type & Amount \\ \hline & Beg Balance & & & & & \\ \hline & 1 Sign note & & & & & \\ \hline & 2 \begin{tabular}{l} Purchase land, building, \& remodel \\ building \end{tabular} & & & & & \\ \hline & 3 Purchase \& install freezer & & & & & \\ \hline & 4 Record Int Received \& Note Rec Pmt & & & & & \\ \hline & 5 Purchase of 6000 units & & & & & \\ \hline 6a & a Sale of 5500 units - record revenue & & & & & \\ \hline 6b & Sale of 5500 units - record COGS & & & & & \\ \hline & 7 Sold 6,000 shares of Comm Stock & & & & & \\ \hline & 8 Sold 4,000 shares of Pref Stock & & & & & \\ \hline & 9 Purchase of 5000 units & & & & & \\ \hline 10a & a Sale of 4750 units - revenue & & & & & \\ \hline 10b & b Sale of 4750 units - COGS & & & & & \\ \hline 11 & 1 Record storage \& delivery fee & & & & & \\ \hline 12 & 2 Record W.T. wages & & & & & \\ \hline 13 & 3 Record cash receipts from customers & & & & & \\ \hline 14 & 4 Record payment to manufacturer & & & & & \\ \hline 15 & 5 Consulting revenue & & & & & \\ \hline 17 & 7 Declared dividend - common stock & & & & & \\ \hline 22 & Declared dividend - preferred stock & & & & & \\ \hline 23 & Record depreciation on building & & & & & \\ \hline 24 & Record depreciation on truck & & & & & \\ \hline 25 & Record depreciation on freezer & & & & & \\ \hline \begin{tabular}{|l|} End \\ Bal \end{tabular} & & & & & Net Change in Cash & $ \\ \hline \end{tabular} What amount of net income was closed to retained earnings by CIC for year 2 ? What is the difference in the total amount closed to retained earnings by CIC for year 2 and the amount of net income in the question above? Why