FIN 350 P3-3 to P3-21 P3-3 P3-6 P3-10 P3-16 P3-18 P3-20 P3-21 FIN 350 P3-3 to P3-21 Details Complete the following problems from the textbook (All 7 problems are printed on here) P3-3 P3-6 P3-10 P3-16 P3-18 P3-20 P3-21 P-3 Income statement preparation On December 31, 2015, Cathy Chen, a self-employed redefining certified public accountant (CPA), completed her first full year in business. During the year, she billed $360,000 for her accounting services. She had two employees, a bookkeeper and a clerical assistant. In addition to her monthly salary of $8,000, Ms. Chen paid annual salaries of $48,000 and $36,000 to the bookkeeper and the clerical assistant, respectively. Employment taxes and benefit costs for Ms. Chen and her employees totaled $34,600 for the year. Expenses for office supplies, including postage, totaled $10,400 for the year. In addition, Ms. Chen spent $17,000 during the year on tax-deductible travel and entertainment associated with client visits and new business development. Lease payments for the office space rented (a tax deductible expense) were $2,700 per month. Depreciation expense on the office furniture and fixtures was $15,600 for the year. During the year, Ms. Chen paid interest of $15,000 on the $120,000 borrowed to start the business. She paid an average tax rate of 30% during 2015. a. Prepare an income statement for Cathy Chen, CPA, for the year ended December 31, 2015. b. Evaluate her 2015 financial performance. P3-6 Balance sheet preparation Use the appropriate items from the following list to prepare in good form Mellarks Baked Goods balance sheet at December 31, 2015. Item Value at ($000) December 31, 2015 Item Value ($000) at December 31, 2015 Accounts payable $ 220 Inventories $375 Accounts receivable 450 Land 100 Accruals 55 Long-term debts 420 Accumulated depreciation 265 Machinery 420 Buildings 225 Marketable securities 75 Cash 215 Notes payable 475 Common stock (at par) 90 Paid in capital in excess Cost of goods sold 2,500 of par 360 Depreciation expense 45 Preferred Stock 100 Equipment 140 Retained Earnings 210 Furniture and fixtures 170 Sales Revenue 3,600 General expense 320 Vehicles 25 P3-10 Statement of retained earnings Hayes Enterprises began 2015 with a retained earnings balance of $928,000. During 2015, the firm earned $377,000 after taxes. From this amount, preferred stockholders were paid $47,000 in dividends. At year-end 2015, the firms retained earnings totaled $1,048,000. The firm had 140,000 shares of common stock outstanding during 2015. a. Prepare a statement of retained earnings for the year ended December 31, 2015, for Hayes Enterprises. ( Note: Be sure to calculate and include the amount of cash dividends paid in 2015.) b. Calculate the firms 2015 earnings per share (EPS). c. How large a per-share cash dividend did the firm pay on common stock during 2015? P3-16 Accounts receivable management An evaluation of the books of Blair Supply, which follows, gives the end-of-year accounts receivable balance, which is believed to consist of amounts originating in the months indicated. The company had annual sales of $2.4 million. The firm extends 30-day credit terms. Month of origin Accounts receivable July $ 3,875 August 2,000 September 34,025 October 15,100 November 52,000 December 193,000 Year-end accounts receivable $300,000 a. Use the year-end total to evaluate the firms collection system. b. If 70% of the firms sales occur between July and December, would this information affect the validity of your conclusion in part a? Explain. P3-18 Debt analysis Springfield Bank is evaluating Creek Enterprises, which has requested a $4,000,000 loan, to assess the firms financial leverage and financial risk. On the basis of the debt ratios for Creek, along with the industry averages (see the to…
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