ACCT $317$ FA$24$

Data Analysis Assignment #$1$

HomeVideo, Inc. is a retailer of home theater and wired home products. The company was founded in

early $2024$ by Jesse Daniels who had significant experience in the industry and numerous contacts. As a

result, the business has achieved strong sales in its first year. During $2024,$ HomeVideo, Inc. recorded all

cash receipts and cash disbursements. However, HomeVideo, Inc.$$s banker is requiring an income

statement and balance sheet prepared on an accrual basis.

The following is a recap of the cash receipts for $2024$:

Collections from customers $ $370,600$

Proceeds from bank loan $100,000$

Proceeds from sale of common stock $60,000$

$ $530,600$

Cash disbursements data from the firm$$s system has been downloaded and is available on the attached

Excel sheet. However, the data needs to be analyzed, categorized, and summarized. In addition,

HomeVideo, Inc.$$s payroll disbursements for wages totaled $$88,100.$ The data was obtained from a

separate $($not provided$)$ payroll journal.

Daniels$,$ a family friend, has asked for your assistance in preparing HomeVideo, Inc.$$s financial

statements at December $31,2024$ on an accrual basis. The following additional information is available:

$1.$ Salaries earned, but not yet paid to employees at year$-$end totaled $$11,200.$

$2.$ Customers owed the company $$16,300$ at year$-$end for credit sales.

$3.$ Cash collections included $$5,600$ of amounts collected in advance from other customers for services

to be performed in $2025.$

$4.$ The insurance payment was for a $1-$year policy starting on February $1,2024.$

$5.$ The bank loan requires interest at $8\%$ per year and was issued on July $1,2024.$ The principal and

interest are to be repaid together on June $30,2026.$

$6.$ The equipment purchased during $2024$ is depreciated, over $5$ years, on a straight$-$line basis assuming

no salvage value. The firm uses a convention where one$-$half year of depreciation is taken in the

year of acquisition $($regardless of the actual purchase date$).$

$7.$ At year$-$end, $$29,000$ is owed to suppliers for merchandise purchased on credit and received.

$8.$ The firm signed a $2-$year lease for a retail store with rent payments starting in January $2024.$ The

rent is due on the $15$th of every month. Additionally, a security deposit of $$3,000$ was paid along with

the first rent payment. This deposit is likely to be returned at the end of the lease term.

$9.$ At year$-$end, merchandise inventory costing $$55,700$ and supplies totaling $$3,700$ remained on hand.

$10.$ The firm$$s tax rate is $20\%.$ Any tax liability will be paid in March of $2025.$

Required:

$$ Prepare an analysis to categorize and summarize all $2024$ cash disbursements by the categories

shown on the attached Excel document.

$$ Prepare an analysis that shows how cash$-$based income is converted to accrual$-$based net income for

$2024.$

$$ Prepare an accrual$-$based income statement, a balance sheet, and a statement of cash flows for the

year ending and as of December $31,2024.$

$$ Prepare a brief memo explaining the cash$-$to$-$accrual conversion and the results of your calculations.

Please $$cut$-$and$-$paste$$ your Word memo into a separate tab in Excel and submit only the Excel file.