Question
TEST TWO Dewy, Cheatum, & Howe (DC&H) is a CPA firm that had the following business transactions for the year of 2015. Using the provided
TEST TWO Dewy, Cheatum, & Howe (DC&H) is a CPA firm that had the following business transactions for the year of 2015.
Using the provided spreadsheet and Financial Statements, please post the business transactions and then create the four (4) required financial statements for year ending 2015
1.) DC&H borrowed $30,000 from the bank to buy a new building
2.) DC&H billed $140,000 in sales revenue, $40,000 in cash and the balance on account
3.) DC&H bought office supplies for $3,000 on account. (due to immaterial amount the supplies were expensed)
4.) DC&H sold the old building for $25,000 - which equaled the salvage value of the building. The original cost of the building was $40,000
5.) DC&H bought $5,000 in marketable securities
6.) DC&H paid $75,000 for salaries
7.) DC&H paid $20,000 towards the Note Payable, of which $18,000 was applied to the principal and the rest interest.
8.) DC&H collected $105,000 on accounts receivable
9.) DC&H paid $12,000 for advertising
10.) DC&H paid $13,000 in utilities
11.) It was determined that an allowance for doubtful accounts needed to be established and DC&H calculated the first year amount to be $5,000
12.) DC&H sold land for $40,000, receiving $20,000 in cash and a $20,000 promissory note
13.) DC&H received and paid in full a tax bill for $5,000, of which $3,000 was from a prior year.
14.) DC&H recognized and expensed the first year depreciation on the new building using the straight line method. The Building salvage value is $5,000 and depreciates over 5 years. The building was purchased on May 1st
15.) DC&H paid $10,000 in dividends
Dewy, Cheatum, & Howe CPA's Beginning Balance 1/1/15 6 10 12 13 15 Totals Cash Marketable securities Accounts receivable Allow. Doubtful accounts Note Receivable Building & Equip Accumulated Depreciation 125,000 (40,000) 40,000 178,000 Total Assets Liabilities Accounts Payable Wages payable Taxes payable Notes payable 40,000 Total liabilities $ Shareholders equity Common stock Retained earnings Sales Revenue Salary Expense Advertising Expense Depreciation Expense Interest Expense Bad Debt expense Utilities Expense Office Supplies Expense Tax Expense Dividends 50,000 Total Shareholders Equitys , Cheatum, & Howe CPA's Balance Sheet at 31-Dec-14 31-Dec-15 , Cheatum, & Howe CPA's Income Statement for Year Ending urrent asse Cash Marketable securities Accounts receivable Allow. for Doubtful accounts 35,500 31-Dec-15 Sales revenue Expenses Total current assets Advertising Utilities Bad Debt Expense Office Supplies Tax Expense Interest Expense Building and equipment, cost Accumulated deprecia 125,000 -40,000 40,000 tion Note Receivable Total assets $178,000 Total expenses urrent liabilities Accounts payable Wages payable Taxes payable 0 Total current liabilities $40,000 Notes payable Shareholders' equity Common stock Retained earnings Treasury stock Total liabilities and shareholders 50,000 , Cheatum, & Howe CPA's $178,000 Statement of Retained Earnings 31-Dec-15 , Cheatum, & Howe CPA's Retained Earnings Beg Bal Net Income/(loss Dividends Retained Earnings End Bal Statement of Cash Flow for Year Ended 31-Dec-15 Cash flow from operating activities NET INCOME (LOSS) Accounts Receivable Accounts payable Taxes payable Net cash provided by operations Cash flow from investing activities Purchases) sale of building and equipment Purchase) sale of marketable securities Purchase) sale of land Net cash provided by investing activities Cash flow from financing activities Issuance (repayment) of long-term debt Payment of dividend Issuance (repurchase) of common stock Net cash provided by financing activities Net cash flow Beginning Cash Balance Ending Cash BalanceStep by Step Solution
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