Develop a financial income statement and balance sheet by combining the chart of account items on the DPSystems income statement and balance sheet in tables 3-9 and 3-10

TABLE 3-9 DPSystems Income Statement DPSystems Income Statement January 1 through December 31, 2007, Cash Basis $ 2,580.00 11,130.00 44,090.00 57,800.00 6,450.00 64,250.00 394.18 158.77 552.95 560.36 78.15 108.70 540.00 3,501.33 4,041.33 1,390.60 1,492.30 1,014.17 1,129.07 395.99 4,031.53 1,881.96 Ordinary Income/Expense Income 4200 Services 4210 - Domain Registrations 4220 - Domain Hosting 4230. Website Maintenance Total 4200 - Services 4500 - Labor Total Income Expense 5080 - Office Supplies 5082 - Printer Supplies 5080 - Office Supplies Other Total 5080 - Office Supplies 5110 - Computer Accessories 5120 . Postage and Delivery 5130. PDA Accessories 5260. Utilities 5261 Internet 5262. Wireless Phone Total 5260 - Utilities 5330 - Promotions 5390 - Travel & Entertainment 5391-Entertainment 5392-Meals 5393. Travel 5394. Gas Total 5390 . Travel & Entertainment 5580. Donations 5640 Professional Fees 5642. Accounting 5643. Cleaning Services Total 5640. Professional Fees 5700. Software 5701 - Desktop Software 5702. PDA Software Total 5700 - Software 5710. Hardware 5720. Bank Service Charges 5760 Bad Debt 5800. Dues and Subscriptions 6050 Contract Services 6110 - Automobile Expense 6130 Cash Discounts 6180 . Insurance 6260 - Printing and Reproduction 6300. Repairs 6340. Automobile Repairs Total 6300. Repairs 6500 - Payroll-David Sobelman 6510 . Payroll Taxes 6700 - Domain Registrations 6710. Domain Hosting Total Expense Net Ordinary Income Other Income/Expense Other Income 8100 . Interest Income Total Other Income Net Other Income Net Income 954.00 1,528.00 2,482.00 107.56 99.35 206.91 108.09 78.90 244.00 142.45 80.00 34.88 3.00 256.00 13.01 553.98 553.98 15,000.00 1,147.50 1,691.80 550.20 35,238.30 29,011.70 19.69 19.69 19.69 $29,031.39 TABLE 3-10 DPSystems Balance Sheet DPSystems Balance Sheet As of December 31, 2007, Cash Basis December 31, 2007 $ 7,242.93 4,695.29 1,416.99 13,355.21 (50.00) (50.00) 410.00 410.00 (19,865.97) 1,105.61 3,135.87 4,241.48 12,522.43 1,498.40 930.98 810.00 3,902.62 4.039.94 ASSETS Current Assets Checking/Savings 1030. Money Market 1031 . Checking 1033 Barter Total Checking Savings 1035 - Accounts Receivable Total Accounts Receivable Other Current Assets 1040. Undeposited Funds Total Other Current Assets Total Current Assets 13,715.21 Fixed Assets 1400. Depreciation Allowance 1500. Computers 1505 - Hardware Parts 1500 - Computers Other Total 1500. Computers 4,241.48 1520. Furniture 1550. Monitors 1560. Printers 1570. PDA 1590 - Misc Assets Total Fixed Assets Other Assets 1700. Organization Expense 1705 . Accumulated Amortization Total Other Assets TOTAL ASSETS LIABILITIES & EQUITY Liabilities Current Liabilities Credit Cards 2200. American Express Total Credit Cards Other Current Liabilities 2350. Payroll Withholdings 2354. State W/H Payable Total 2350. Payroll Withholdings Total Other Current Liabilities Total Current Liabilities Total Liabilities Equity 3100 - Retained Earnings 3200. David's Equity 3210. David's Equity Investments 3230. David's Equity Draws 3200. David's Equity-Other Total 3200. David's Equity Net Income Total Equity TOTAL LIABILITIES & EQUITY 620.00 (310.00) 310.00 18,065.15 1,391.26 1,391.26 600.00 600.00 600.00 1,991.26 1,991.26 21,624.39 2,993.46 (37,455.73) (119.62) (34,581.89) 29,031.39 16,073.89 $18,065.15 CASE STUDY: DPSYSTEMS, LLC 2008 Philip J. Adelman and Alan M. Marks David Sobelman was born and raised in Glendale, Arizona, where he attended Glendale public schools. After high school, he enrolled in the computer information systems degree program at DeVry University. In 1997, he graduated with a Bachelor of Science degree in computer information systems. DeVry offers two areas that try to provide students with real-world experience: one is the senior project course, in which students develop projects for companies in the area where their campuses are located; the other is an intern program with industry, where students work part-time while attending classes. David's senior project included writing a client/server application in Power- Builder for a photography company. The application was so useful that the company continued to use it (with some modifications) for more than 10 years since its initial development. David did part-time job as a consultant for the photographer to update and modify the application. While a ude at DeVry, he was also an rn with Salt River Project (SRP), a primary supplier of electricity and water in Phoenix. On grad- uation, he was hired full-time by SRP as a programmer, working on their customer information systems. After 1 year, David quit SRP and went to work at Integrated Information Systems (IIS), which was a start-up company that was quickly expand- ing. He was the 60th employee of IIS. After a year, David determined that he was not happy with the IIS expansion and reorganization plans and began looking for another opportunity. He found a job with Choice Hotels International. Subsequent to David's leaving IIS, the company expanded rapidly, went public, and declared bankruptcy within 3 years. He currently works with Choice Hotels at its western headquarters in Phoenix, where he is involved in developing the company's Web-based property management system (PMS). As of this publication, Choice Hotels' PMS is the most widely used system in the industry, and Choice Hotels is the only hotel company to successfully develop and deploy such a system, which is used by more than 1,500 hotels. Ever since graduating from college, David had aspired to develop a computer- based side business and chose to incorporate DPS, they were his initials. His primary intention was to create a business that ensured a continuous flow of revenue. Over the years, he has worked with family and friends on a part-time basis, helping with their computer issuesupgrading, fixing problems, installing software, and the like. In 2001, David was elected to the board of his home owner's association (HOA). One of his goals then was to put together a website for the community that would provide information about the association. There was a short time between quitting IIS and going to work for Choice when David taught himself Hypertext Markup Language (HTML) and how to work with and build Web pages. Within a year, David created a dynamic, user-friendly Web page for his HOA. When a community is going to be developed by a builder, it typically hires a management company to manage the day-to-day business of the HOA. The manage- ment company often bills the builder to create an HOA website. Having a website Questions 91 in place enhances the viability of the development and makes it easier for the builder to transition to a property-owner HOA. Once 75 percent of the homes within the community are sold, the homeowners elect a board of directors and can then either keep the current management company or hire a new one. The management com- pany handles all homeowner notifications, inspects the properties, pays invoices, and manages the day-to-day operations of the association. The property management company that manages several hundred associations in the Phoenix area, in addition to the one in which David lives, was very satisfied with the quality and functionality of the website David put together. It was impressed by what the Web page offered to the homeowners and how it helped open the communications link between homeowners, the board of directors, and the management company. The Information Technology (IT) department of the management company was primarily involved in computer hardware and had no real interest in writing software or building websites. As a member of his own HOA board of directors, David got himself familiar with the inner workings of the management company. He developed a proposal and asked the company if they would like him to develop similar websites for each of its HOAs. The management company doesn't actually pay for the website maintenance because the sites are actually paid for by the individual HOA. David is notified by the management company when any information must be added or removed from an individual HOA website. David's company charges each HOA a nominal monthly fee to host and update each HOA website. He manages his company out of his home, and almost all correspondence with the management company is handled via e-mail. This part-time job provides David with an additional gross income in excess of $64,000 and a net income including salary and profit in excess of $44,000 per year. See the DPSystems income statement (Table 39) and balance sheet (Table 310) for 2007. David is an example of an outstanding young entrepreneur. QUESTIONS 1. Develop a financial income statement and balance sheet by combining the chart of account items on the DPSystems income statement and balance sheet in Tables 3-9 and 310. 2. List the chart of account numbers and major categories used in DPSystems accounting system. 3. How would a hotel chain use a property management system to incorporate items from individual hotels into their corporate financial statements? TABLE 3-9 DPSystems Income Statement DPSystems Income Statement January 1 through December 31, 2007, Cash Basis $ 2,580.00 11,130.00 44,090.00 57,800.00 6,450.00 64,250.00 394.18 158.77 552.95 560.36 78.15 108.70 540.00 3,501.33 4,041.33 1,390.60 1,492.30 1,014.17 1,129.07 395.99 4,031.53 1,881.96 Ordinary Income/Expense Income 4200 Services 4210 - Domain Registrations 4220 - Domain Hosting 4230. Website Maintenance Total 4200 - Services 4500 - Labor Total Income Expense 5080 - Office Supplies 5082 - Printer Supplies 5080 - Office Supplies Other Total 5080 - Office Supplies 5110 - Computer Accessories 5120 . Postage and Delivery 5130. PDA Accessories 5260. Utilities 5261 Internet 5262. Wireless Phone Total 5260 - Utilities 5330 - Promotions 5390 - Travel & Entertainment 5391-Entertainment 5392-Meals 5393. Travel 5394. Gas Total 5390 . Travel & Entertainment 5580. Donations 5640 Professional Fees 5642. Accounting 5643. Cleaning Services Total 5640. Professional Fees 5700. Software 5701 - Desktop Software 5702. PDA Software Total 5700 - Software 5710. Hardware 5720. Bank Service Charges 5760 Bad Debt 5800. Dues and Subscriptions 6050 Contract Services 6110 - Automobile Expense 6130 Cash Discounts 6180 . Insurance 6260 - Printing and Reproduction 6300. Repairs 6340. Automobile Repairs Total 6300. Repairs 6500 - Payroll-David Sobelman 6510 . Payroll Taxes 6700 - Domain Registrations 6710. Domain Hosting Total Expense Net Ordinary Income Other Income/Expense Other Income 8100 . Interest Income Total Other Income Net Other Income Net Income 954.00 1,528.00 2,482.00 107.56 99.35 206.91 108.09 78.90 244.00 142.45 80.00 34.88 3.00 256.00 13.01 553.98 553.98 15,000.00 1,147.50 1,691.80 550.20 35,238.30 29,011.70 19.69 19.69 19.69 $29,031.39 TABLE 3-10 DPSystems Balance Sheet DPSystems Balance Sheet As of December 31, 2007, Cash Basis December 31, 2007 $ 7,242.93 4,695.29 1,416.99 13,355.21 (50.00) (50.00) 410.00 410.00 (19,865.97) 1,105.61 3,135.87 4,241.48 12,522.43 1,498.40 930.98 810.00 3,902.62 4.039.94 ASSETS Current Assets Checking/Savings 1030. Money Market 1031 . Checking 1033 Barter Total Checking Savings 1035 - Accounts Receivable Total Accounts Receivable Other Current Assets 1040. Undeposited Funds Total Other Current Assets Total Current Assets 13,715.21 Fixed Assets 1400. Depreciation Allowance 1500. Computers 1505 - Hardware Parts 1500 - Computers Other Total 1500. Computers 4,241.48 1520. Furniture 1550. Monitors 1560. Printers 1570. PDA 1590 - Misc Assets Total Fixed Assets Other Assets 1700. Organization Expense 1705 . Accumulated Amortization Total Other Assets TOTAL ASSETS LIABILITIES & EQUITY Liabilities Current Liabilities Credit Cards 2200. American Express Total Credit Cards Other Current Liabilities 2350. Payroll Withholdings 2354. State W/H Payable Total 2350. Payroll Withholdings Total Other Current Liabilities Total Current Liabilities Total Liabilities Equity 3100 - Retained Earnings 3200. David's Equity 3210. David's Equity Investments 3230. David's Equity Draws 3200. David's Equity-Other Total 3200. David's Equity Net Income Total Equity TOTAL LIABILITIES & EQUITY 620.00 (310.00) 310.00 18,065.15 1,391.26 1,391.26 600.00 600.00 600.00 1,991.26 1,991.26 21,624.39 2,993.46 (37,455.73) (119.62) (34,581.89) 29,031.39 16,073.89 $18,065.15 CASE STUDY: DPSYSTEMS, LLC 2008 Philip J. Adelman and Alan M. Marks David Sobelman was born and raised in Glendale, Arizona, where he attended Glendale public schools. After high school, he enrolled in the computer information systems degree program at DeVry University. In 1997, he graduated with a Bachelor of Science degree in computer information systems. DeVry offers two areas that try to provide students with real-world experience: one is the senior project course, in which students develop projects for companies in the area where their campuses are located; the other is an intern program with industry, where students work part-time while attending classes. David's senior project included writing a client/server application in Power- Builder for a photography company. The application was so useful that the company continued to use it (with some modifications) for more than 10 years since its initial development. David did part-time job as a consultant for the photographer to update and modify the application. While a ude at DeVry, he was also an rn with Salt River Project (SRP), a primary supplier of electricity and water in Phoenix. On grad- uation, he was hired full-time by SRP as a programmer, working on their customer information systems. After 1 year, David quit SRP and went to work at Integrated Information Systems (IIS), which was a start-up company that was quickly expand- ing. He was the 60th employee of IIS. After a year, David determined that he was not happy with the IIS expansion and reorganization plans and began looking for another opportunity. He found a job with Choice Hotels International. Subsequent to David's leaving IIS, the company expanded rapidly, went public, and declared bankruptcy within 3 years. He currently works with Choice Hotels at its western headquarters in Phoenix, where he is involved in developing the company's Web-based property management system (PMS). As of this publication, Choice Hotels' PMS is the most widely used system in the industry, and Choice Hotels is the only hotel company to successfully develop and deploy such a system, which is used by more than 1,500 hotels. Ever since graduating from college, David had aspired to develop a computer- based side business and chose to incorporate DPS, they were his initials. His primary intention was to create a business that ensured a continuous flow of revenue. Over the years, he has worked with family and friends on a part-time basis, helping with their computer issuesupgrading, fixing problems, installing software, and the like. In 2001, David was elected to the board of his home owner's association (HOA). One of his goals then was to put together a website for the community that would provide information about the association. There was a short time between quitting IIS and going to work for Choice when David taught himself Hypertext Markup Language (HTML) and how to work with and build Web pages. Within a year, David created a dynamic, user-friendly Web page for his HOA. When a community is going to be developed by a builder, it typically hires a management company to manage the day-to-day business of the HOA. The manage- ment company often bills the builder to create an HOA website. Having a website Questions 91 in place enhances the viability of the development and makes it easier for the builder to transition to a property-owner HOA. Once 75 percent of the homes within the community are sold, the homeowners elect a board of directors and can then either keep the current management company or hire a new one. The management com- pany handles all homeowner notifications, inspects the properties, pays invoices, and manages the day-to-day operations of the association. The property management company that manages several hundred associations in the Phoenix area, in addition to the one in which David lives, was very satisfied with the quality and functionality of the website David put together. It was impressed by what the Web page offered to the homeowners and how it helped open the communications link between homeowners, the board of directors, and the management company. The Information Technology (IT) department of the management company was primarily involved in computer hardware and had no real interest in writing software or building websites. As a member of his own HOA board of directors, David got himself familiar with the inner workings of the management company. He developed a proposal and asked the company if they would like him to develop similar websites for each of its HOAs. The management company doesn't actually pay for the website maintenance because the sites are actually paid for by the individual HOA. David is notified by the management company when any information must be added or removed from an individual HOA website. David's company charges each HOA a nominal monthly fee to host and update each HOA website. He manages his company out of his home, and almost all correspondence with the management company is handled via e-mail. This part-time job provides David with an additional gross income in excess of $64,000 and a net income including salary and profit in excess of $44,000 per year. See the DPSystems income statement (Table 39) and balance sheet (Table 310) for 2007. David is an example of an outstanding young entrepreneur. QUESTIONS 1. Develop a financial income statement and balance sheet by combining the chart of account items on the DPSystems income statement and balance sheet in Tables 3-9 and 310. 2. List the chart of account numbers and major categories used in DPSystems accounting system. 3. How would a hotel chain use a property management system to incorporate items from individual hotels into their corporate financial statements