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Accounting - Wrapping It Up Assignment - Summer2024

The document provides a detailed overview of XYZ, Inc.'s financial statements as of December 31, 2022, including a balance sheet, income statement, and statement of retained earnings. It outlines a series of transactions that occurred in January 2023, requiring analysis and adjustments to prepare updated financial statements. The assignment includes tasks for creating a financial statement effects template, multi-step income statement, statement of retained earnings, statement of cash flows, and a classified balance sheet as of January 31, 2023.

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29 views3 pages

Accounting - Wrapping It Up Assignment - Summer2024

The document provides a detailed overview of XYZ, Inc.'s financial statements as of December 31, 2022, including a balance sheet, income statement, and statement of retained earnings. It outlines a series of transactions that occurred in January 2023, requiring analysis and adjustments to prepare updated financial statements. The assignment includes tasks for creating a financial statement effects template, multi-step income statement, statement of retained earnings, statement of cash flows, and a classified balance sheet as of January 31, 2023.

Uploaded by

dusadpiyush96
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Jason W. Matthews, Ph.D.

FORVIS Faculty Fellow

Wrapping It Up - Assignment

XYZ, Inc. - Review of the Basics

Three financial statements, the balance sheet, income statement, and statement
of retained earnings for XYZ, Inc., an accounting and consulting firm, are
included below.

XYZ, Inc.
Balance Sheet
As of December 31, 2022

Liabilities and Shareholder's


Assets: Equity:

Cash $12,000 Accounts payable $4,000


Accounts receivable 22,000 Salaries payable 8,000
Supplies 7,000 Utilities payable 1,000
Land 18,000 Notes payable 25,000
Equipment (net) 45,000 Common stock 53,000
Retained earnings 13,000
Total liabilities &
Total assets $104,000 stockholder's equity $104,000

XYZ, Inc.
Income Statement
For Year Ended December 31, 2022

Consulting revenue $150,000


Salaries expense (90,000)
Marketing expense (24,000)
Administrative expense (22,000)

Net Income $14,000


XYZ, Inc.
Statement of Retained Earnings
For Year Ended December 31,
2022

Beginning balance $0
Plus: Net income 14,000
Jason W. Matthews, Ph.D.
FORVIS Faculty Fellow

Less: Dividends (1,000)

Ending balance $13,000

During January 2023, XYZ engaged in these transactions:

(1) Paid in full with cash the December 31 balance of accounts payable.

(2) Furnished professional services and billed $25,000. It collected


$13,000 of the December 31 balance of receivables and none of the
January billings.

(3) Paid all new marketing expenses with cash as they arose, $4,500.

(4) Incurred supplies expenses (i.e. used supplies) of $5,100. The unused
supplies (i.e., inventory) balance on January 31 was $4,000. All of the
January inventory purchases were on credit. (Hint: You need record the
expenses and also need to record January’s supplies purchases)

(5) Paid the bank $5,000 to reduce principal of the long-term note payable
($5,000 payment due each January), and additionally paid one month's
s i m p l e interest in cash at a 12% per year rate on the month's beginning
balance. You need to record a principal reduction of $5,000, as well as the
appropriate amount of cash paid for interest as a separate item or amount from
the $5,000 principal reduction.

(6) Sold the land for $25,000 cash.

(7) Paid utilities payable outstanding as of December 31, 2022. The $1,200
bill for January's utility consumption will be paid in February.

(8) On January 31, purchased computer equipment for $1,000 cash and a
$5,000 installment note payable at 10% interest due in six months
(i.e., no cash was exchanged for the note). Use the "Equipment (net)"
account for this transaction.
Jason W. Matthews, Ph.D.
FORVIS Faculty Fellow

(9) Declared (obligated itself to pay) a dividend of $3,000. It will be paid in


February.

(10) Additional information: Equipment that originally cost $54,000, has an


estimated salvage value of $0, and is being depreciated straight-line over
six years ($750 per month). Record the adjustment for accumulated
depreciation in the "Equipment (net)" account.

(11) Paid salaries payable outstanding as of December 31, 2022. Incurred and
paid with cash salaries expense of $7,500 in January (none outstanding at
the end of January).

Required:

a. Beginning with the 12/31/2022 balances in the balance sheet accounts,


analyze each of the transactions (1 – 11) using a version of the financial
statement effects template. At the end, you should have balances for the
1/31/2023 balance sheet. Set up a separate column for each balance
sheet account.

b. Prepare the income statement (multi-step), statement of retained earnings,


and statement of cash flows for the month of January. You can construct
the cash flow statement from the detail in the financial statement effects
template for cash. Classify each cash flow as (1) Operating Activities, (2)
Investing Activities, or (3) Financing Activities.

c. Prepare a "classified" balance sheet as of January 31, 2023. As


appropriate, a "classified" balance sheet separates assets into 1) current
assets, 2) investments, 3) property, plant, & equipment, 4) intangible
assets, and 5) other assets, and separates liabilities into 1) current
liabilities and 2) long-term liabilities. Each equity account should have its
own heading on the balance sheet.

d. Use your financial statement effects template and the financial statements
created in steps “b” and “c” to take the Section 3 quiz in eLC.

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