A common size income statement for creek enterprises

Questions P3-3 Income statement preparation On December 31, 2015, Cathy Chen, a self-employed 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 taxdeductible 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 Mellark’s Baked Goods balance sheet at December 31, 2015. LG 1 LG 1 LG 1 Personal Finance Problem P3–4 Income statement preparation Adam and Arin Adams have collected their personal income and expense information and have asked you to put together an income and expense statement for the year ended December 31, 2015. The following information is received from the Adams family. Adam’s salary $45,000 Utilities $ 3,200 Arin’s salary 30,000 Groceries 2,200 Interest received 500 Medical 1,500 Dividends received 150 Property taxes 1,659 Auto insurance 600 Income tax, Social Security 13,000 Home insurance 750 Clothes and accessories 2,000 Auto loan payment 3,300 Gas and auto repair 2,100 Mortgage payment 14,000 Entertainment 2,000 Value ($000) at Value ($000) at Item December 31, 2015 Item 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 firm’s 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 firm’s 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. a. Use the year-end total to evaluate the firm’s collection system.