Reed & Daughters entered into the following transactions during 2017. 

On January 1, paid $4,000 in cash to repay part of the principal on the loan Performed painting services for customers totaling $41,900, of which $15,000 was on credit and the rest was for cash. 

On January 1, purchased a patent for $6,000. 

Paid shareholders a cash dividend totaling $8,300. 

Paid cash to employees of $15,000 for wages. This cash payment included the wages payable at December 31, 2016. The rest is for work employees did in 2017. 

Paid misc. operating expenses of $9,300. 

Sold painting supplies to customers for $9,550 cash. 

The cost of the inventory sold was $4,700. 

Collected $4,000 from customers for services to be delivered in a future period. 

Collected cash from customers of $5,000 for outstanding accounts receivable. 

Invested excess cash in short-term investments of $2,400. 

Issued common stock for $12,200. Paid suppliers $2,500. 

Purchased inventory on credit of $5,500. 

The patent is amortized over 4 years. 

Record amortization for 2017. 

The equipment is depreciated over 8 years of useful life on a straight-line basis. No new equipment was purchased during the year. 

Record the depreciation for 2017. The interest rate on the remaining balance in loans payable is 2%, and it will be paid in January of 2018. $1,500 of the services related to transaction 8 were delivered by the end of the year. The prepaid rent on the balance sheet represents rent for four years for the rental period beginning on January 1, 2017. Record the rent that was consumed during 2017. Tax expense for the year was $4,700 and will be repaid in 2018. 

Directions: 

1. Prepare a spreadsheet that shows the beginning balances, transactions 1-19, and the ending balances. You can start with the template for the boot camp homework or 2.29 by zeroing out all the transactions and amounts in the statements. 

2. Use the spreadsheet to help you prepare in excel a 2017 income statement (include subtotals for gross profit, operating profit, income before tax, and net income) balance sheet (include subtotals for current assets, total assets, current liabilities, total liabilities, total liabilities, shareholders equity and total liabilities and shareholders equity) statement of retained earnings (it’s OK to do the entire statement of shareholders equity but only statement of retained earnings is required) direct cash flow statement indirect cash flow statement.

Note that you are only penalized for the initial error you make in recording transactions; the financial statements are graded assuming the numbers you put in the transaction spreadsheet were correct.
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Answer rating: 100% (QA)

1 Beginning balances Assets Cash 4000 Accounts receivable 15000 Inventory 6000 Prepaid rent 4000 Tot... View the full answer