Scenario: You are an accountant at Rock Castle Construction. Your boss has asked that you create general
Question:
Scenario:
You are an accountant at Rock Castle Construction. Your boss has asked that you create general purpose financial statements from a trial balance that he has created for you. Additionally, the company is for sale and you need to draft a letter to potential buyers explaining the overall financial health and profitability of the business. You should use several appropriate financial measure formulas as evidence (hint: we covered a few of the many possible formulas in discussion posts). Your boss has strongly reminded you that the company needs to sell or you may be out of a job. You have been strongly encouraged to write a very positive letter to potential buyers. Generally, buyers are most interested in knowing about profits.
Required:
1.)Create the four general purpose financial statements for the year ended Dec 31, 2019 i.e. Income statement, Balance Sheet, Statement of Owners Equity/Retained Earnings, Statement of Cash Flows.
2.)Write a letter to potential buyers.
Dec 31, 19 | ||
Debit | Credit | |
| 10300 · Savings | 17,910.19 | |
| 10100 · Checking | 35,068.48 | |
| 10400 · Petty Cash | 755.05 | |
| 11000 · Accounts Receivable | 92,707.93 | |
| 12000 · Undeposited Funds | 2,440.00 | |
| 12100 · Inventory Asset | 30,683.38 | |
| 12800 · Employee Advances | 832.00 | |
| 13100 · Pre-paid Insurance | 4,050.00 | |
| 13400 · Retainage Receivable | 3,703.02 | |
| 1600 · scooter | 4,000.00 | |
| 15000 · Furniture and Equipment | 34,326.00 | |
| 15100 · Vehicles | 78,936.91 | |
| 15200 · Buildings and Improvements | 325,000.00 | |
| 15300 · Construction Equipment | 15,300.00 | |
| 16900 · Land | 90,000.00 | |
| 17000 · Accumulated Depreciation | 110,344.60 | |
| 18700 · Security Deposits | 1,720.00 | |
| 20000 · Accounts Payable | 15,536.30 | |
| 20500 · QuickBooks Credit Card | 150,094.20 | |
| 20600 · CalOil Credit Card | 382.62 | |
| 24000 · Payroll Liabilities:24010 · Federal Withholding | 1,364.00 | |
| 24000 · Payroll Liabilities:24020 · FICA Payable | 2,118.82 | |
| 24000 · Payroll Liabilities:24030 · AEIC Payable | 0.00 | |
| 24000 · Payroll Liabilities:24040 · FUTA Payable | 100.00 | |
| 24000 · Payroll Liabilities:24050 · State Withholding | 299.19 | |
| 24000 · Payroll Liabilities:24060 · SUTA Payable | 110.00 | |
| 24000 · Payroll Liabilities:24070 · State Disability Payable | 48.13 | |
| 24000 · Payroll Liabilities:24080 · Worker's Compensation | 1,214.31 | |
| 24000 · Payroll Liabilities:24100 · Emp. Health Ins Payable | 150.00 | |
| 25500 · Sales Tax Payable | 957.63 | |
| 2600 · Scooter Loan | 4,000.00 | |
| 23000 · Loan - Vehicles (Van) | 10,501.47 | |
| 23100 · Loan - Vehicles (Utility Truck) | 19,936.91 | |
| 23200 · Loan - Vehicles (Pickup Truck) | 22,641.00 | |
| 28100 · Loan - Construction Equipment | 13,911.32 | |
| 28200 · Loan - Furniture/Office Equip | 21,000.00 | |
| 28700 · Note Payable - Bank of Anycity | 2,693.21 | |
| 28900 · Mortgage - Office Building | 296,283.00 | |
| 30100 · Capital Stock | 39,273.75 | |
| 32000 · Retained Earnings | 61,756.76 | |
| 40100 · Construction Income | 0.00 | |
| 40100 · Construction Income:40110 · Design Income | 36,729.25 | |
| 40100 · Construction Income:40130 · Labor Income | 208,225.42 | |
| 40100 · Construction Income:40140 · Materials Income | 119,920.67 | |
| 40100 · Construction Income:40150 · Subcontracted Labor Income | 82,710.35 | |
| 40100 · Construction Income:40199 · Less Discounts given | 48.35 | |
| 40500 · Reimbursement Income:40520 · Permit Reimbursement Income | 1,223.75 | |
| 40500 · Reimbursement Income:40530 · Reimbursed Freight & Delivery | 896.05 | |
| 50100 · Cost of Goods Sold | 14,766.19 | |
| 54000 · Job Expenses:54200 · Equipment Rental | 1,850.00 | |
| 54000 · Job Expenses:54300 · Job Materials | 99,435.90 | |
| 54000 · Job Expenses:54400 · Permits and Licenses | 700.00 | |
| 54000 · Job Expenses:54500 · Subcontractors | 63,217.95 | |
| 54000 · Job Expenses:54520 · Freight & Delivery | 797.10 | |
| 54000 · Job Expenses:54599 · Less Discounts Taken | 201.81 | |
| food | 44.95 | |
| 60100 · Automobile:60110 · Fuel | 1,588.70 | |
| 60100 · Automobile:60120 · Insurance | 2,850.24 | |
| 60100 · Automobile:60130 · Repairs and Maintenance | 2,406.00 | |
| 60300 · Bad debt | 300.00 | |
| 60600 · Bank Service Charges | 125.00 | |
| 62100 · Insurance:62110 · Disability Insurance | 582.06 | |
| 62100 · Insurance:62120 · Liability Insurance | 5,885.96 | |
| 62100 · Insurance:62130 · Work Comp | 13,657.07 | |
| 62400 · Interest Expense:62420 · Loan Interest | 151,995.65 | |
| 62700 · Payroll Expenses:62710 · Gross Wages | 110,400.10 | |
| 62700 · Payroll Expenses:62720 · Payroll Taxes | 8,445.61 | |
| 62700 · Payroll Expenses:62730 · FUTA Expense | 268.00 | |
| 62700 · Payroll Expenses:62740 · SUTA Expense | 1,233.50 | |
| 63100 · Postage | 104.20 | |
| 63600 · Professional Fees:63610 · Accounting | 250.00 | |
| 64200 · Repairs:64210 · Building Repairs | 175.00 | |
| 64200 · Repairs:64220 · Computer Repairs | 0.00 | |
| 64200 · Repairs:64230 · Equipment Repairs | 1,350.00 | |
| 64800 · Tools and Machinery | 2,820.68 | |
| 65100 · Utilities:65110 · Gas and Electric | 1,164.16 | |
| 65100 · Utilities:65120 · Telephone | 841.15 | |
| 65100 · Utilities:65130 · Water | 264.00 | |
| 70100 · Other Income | 146.80 | |
| 70200 · Interest Income | 229.16 | |
| Total | 1,225,000.48 | 1,225,000.48 |
| Dec 31, 18 | ||
| Debit | Credit | |
| 10300 · Savings | 15,881.03 | |
| 10100 · Checking | 36,810.16 | |
| 10400 · Petty Cash | 500.00 | |
| 11000 · Accounts Receivable | 21,249.39 | |
| 12000 · Undeposited Funds | 18,252.08 | |
| 12100 · Inventory Asset | 12,767.04 | |
| 12800 · Employee Advances | 770.00 | |
| 13100 · Pre-paid Insurance | 4,943.02 | |
| 13400 · Retainage Receivable | 1,796.72 | |
| 15000 · Furniture and Equipment | 22,826.00 | |
| 15100 · Vehicles | 78,936.91 | |
| 15200 · Buildings and Improvements | 325,000.00 | |
| 15300 · Construction Equipment | 15,300.00 | |
| 16900 · Land | 90,000.00 | |
| 17000 · Accumulated Depreciation | 110,344.60 | |
| 18700 · Security Deposits | 1,720.00 | |
| 20000 · Accounts Payable | 13,100.00 | |
| 20500 · QuickBooks Credit Card | 0.00 | |
| 20600 · CalOil Credit Card | 530.00 | |
| 24000 · Payroll Liabilities:24010 · Federal Withholding | 0.00 | |
| 24000 · Payroll Liabilities:24020 · FICA Payable | 0.00 | |
| 24000 · Payroll Liabilities:24040 · FUTA Payable | 0.00 | |
| 24000 · Payroll Liabilities:24050 · State Withholding | 0.00 | |
| 24000 · Payroll Liabilities:24060 · SUTA Payable | 0.00 | |
| 24000 · Payroll Liabilities:24070 · State Disability Payable | 0.00 | |
| 24000 · Payroll Liabilities:24080 · Worker's Compensation | 0.00 | |
| 25500 · Sales Tax Payable | 72.18 | |
| 23000 · Loan - Vehicles (Van) | 16,290.52 | |
| 23100 · Loan - Vehicles (Utility Truck) | 19,936.91 | |
| 23200 · Loan - Vehicles (Pickup Truck) | 22,641.00 | |
| 28100 · Loan - Construction Equipment | 14,343.11 | |
| 28200 · Loan - Furniture/Office Equip | 21,000.00 | |
| 28700 · Note Payable - Bank of Anycity | 31,180.52 | |
| 28900 · Mortgage - Office Building | 296,283.00 | |
| 30100 · Capital Stock | 39,273.75 | |
| 32000 · Retained Earnings | 36,213.97 | |
| 40100 · Construction Income:40110 · Design Income | 3,400.00 | |
| 40100 · Construction Income:40130 · Labor Income | 16,335.00 | |
| 40100 · Construction Income:40140 · Materials Income | 36,023.77 | |
| 40100 · Construction Income:40150 · Subcontracted Labor Income | 112,666.50 | |
| 40500 · Reimbursement Income:40520 · Permit Reimbursement Income | 835.00 | |
| 50100 · Cost of Goods Sold | 5,620.96 | |
| 54000 · Job Expenses:54300 · Job Materials | 12,171.60 | |
| 54000 · Job Expenses:54400 · Permits and Licenses | 225.00 | |
| 54000 · Job Expenses:54500 · Subcontractors | 53,350.00 | |
| 60100 · Automobile:60110 · Fuel | 1,715.00 | |
| 60100 · Automobile:60120 · Insurance | 2,850.24 | |
| 60100 · Automobile:60130 · Repairs and Maintenance | 2,550.00 | |
| 60600 · Bank Service Charges | 150.00 | |
| 60900 · Depreciation Expense | 44,435.91 | |
| 62100 · Insurance:62110 · Disability Insurance | 600.00 | |
| 62100 · Insurance:62120 · Liability Insurance | 5,092.98 | |
| 62100 · Insurance:62130 · Work Comp | 3,300.00 | |
| 62400 · Interest Expense:62420 · Loan Interest | 4,705.48 | |
| 63600 · Professional Fees:63610 · Accounting | 250.00 | |
| 64200 · Repairs:64220 · Computer Repairs | 714.00 | |
| 64200 · Repairs:64230 · Equipment Repairs | 1,800.00 | |
| 64800 · Tools and Machinery | 1,457.91 | |
| 65100 · Utilities:65110 · Gas and Electric | 1,841.43 | |
| 65100 · Utilities:65120 · Telephone | 880.00 | |
| 65100 · Utilities:65130 · Water | 288.00 | |
| 70200 · Interest Income | 281.03 | |
| Total | 790,750.86 | 790,750.86 |
Expert Answer:
Statement of Retained Earnings for the year ended December31st 2019 Retained Earnings for the year e... View the full answer
