Reference no: EM132216303
Assignment -
Sanchez Consulting Company - Mark Sanchez established Sanchez Consulting Company on September 1, 2018, as a backup plan since he is now a free agent and has been suspended for the first four games of the season. Being cut from the Bears, Cowboys, Eagles and Jets has made him a little worried about his career as a quarterback. It has been in the NFL for 10 years. Since he was a good student at USC he thought he would put his college education to work.
The company had the following transactions during September.
a) Sept. 1 - The Company sold shares of common stock for $30,000 cash.
b) Sept. 1 - The Company purchased a one-year insurance policy for $300 in cash.
c) Sept. 1 - The Company purchased office equipment costing $8,000 by signing a 6% note. The Equipment has a 5 year life and no salvage value. The note requires monthly principal payments of $225 beginning on October 1st until the balance is paid.
d) Sept. 10 - The Company purchased $735 of office supplies for cash.
e) Sept. 15 - The company paid legal and registration fees to register their trademark which is his nickname "Sanchize." The fees incurred totaled $4,000, which were paid in cash.
f) Sept. 29 - The Company billed customers $5,500 for consulting services performed.
g) Sept. 30 - The Company paid $1,450 for employee's salary.
h) Sept. 30 - Since the company had a good month so Sanchez declared a $1,000 dividend to be paid on October 10th.
Additional Information:
i) On September 30th, the company took an inventory of the supplies and found that they had $500 of supplies on hand.
ii) Equipment purchased before the 15th of the month are depreciated for a whole month using the straight-line method.
iii) On October 3rd received the September utilities bill for $188.
Required:
a. Journalize the transactions.
b. Prepare the adjusting entries.
c. Post all entries to the accounts.
d. Prepare a Single-Step Income Statement, Retained Earnings Statement and a Classified Balance Sheet for his first month of operations.
e. Prepare the closing entries.
f. Comment on the company's liquidity, capital structure and financial flexibility and their overall financial position.
Be sure to round all your answers. No pennies!
Check Digit for Balance Sheet:
Total Assets = $41,657
Net Income = $3,429
Depreciation Methods
Madison Florists acquired a truck on January 1, 2018. The company paid $11,000 for the truck, $300 delivery charge, and $450 to paint the company name on the side of the truck and $250 for a motor vehicle license. The company's accounting manager estimates the truck to have a five-year useful life and a salvage value of $1,750.
Part 1 - On January 1, 2018, how much should Madison Florist capitalize for the cost of the truck?
Part 2 - Compute depreciation expense for 2018 and 2019 using each of the following methods. Also, compute book value at the end of each year.
a. Straight-line
|
Year
|
Depreciation expense for the year ended Dec. 31
|
Book value at Dec. 31
|
|
2018
|
$
|
$
|
|
2019
|
$
|
$
|
b. Declining-balance
|
Year
|
Depreciation expense for the year ended Dec. 31
|
Book value at Dec. 31
|
|
2018
|
$
|
$
|
|
2019
|
$
|
$
|
c. On April 1, 2020, Madison sold the truck for $6,000. Prepare the required entries to record the sale. Assume Madison depreciated the truck using the straight-line method. Madison did not record any depreciation expense in 2020. (Hint: you need two separate entries).