ACCOUNTINGBoilermaker House Painting Company incurs the following transactions for September.
$$
\begin{matrix} \text{1. September 3} & \text{Paint houses in the current month for \$20,000 on account.}\\ \text{2. September 8} & \text{Purchase painting equipment for \$21,000 cash.}\\ \text{3. September 12} & \text{Purchase office supplies on account for \$3,500.}\\ \text{4. September 15} & \text{Pay employee salaries of \$4,200 for the current month.}\\ \text{5. September 19} & \text{Purchase advertising to appear in the current month for \$1,000 cash.}\\ \text{6. September 22} & \text{Pay office rent of \$5,400 for the current month.}\\ \text{7. September 26} & \text{Receive \$15,000 from customers in (1) above.}\\
\text{8. September 30} & \text{Receive cash of \$6,000 in advance from a customer who plans to have }\\ \text{ } & \text{his house painted in the following month.}\\
\end{matrix}
$$
1. Record each transaction. Boilermaker uses the following accounts: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Deferred Revenue, Common Stock, Retained Earnings, Service Revenue, Salaries Expense, Advertising Expense, and Rent Expense. 2. Post each transaction to T-accounts and compute the ending balance of each account. At the beginning of September, the company had the following account balances: Cash, $46,100; Accounts Receivable,$1,700; Supplies, $500; Equipment,$7,400; Accounts Payable, $1,200; Common Stock,$25,000; Retained Earnings, $29,500. All other accounts had a beginning balance of zero. 3. After calculating the ending balance of each account, prepare a trial balance. ACCOUNTINGGazelle Corporation, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s balance sheets and income statement follow.
$$
\begin{matrix}
\text{GAZELLE CORPORATION Comparative Balance Sheets December 31, 2017 and 2016}\\
\quad & \text{2017} & \text{2016}\\
\text{Assets}\\
\text{Cash} \ldots\ldots\ldots& \text{\$123,450} & \text{\$ 61,550}\\
\text{Accounts receivable} \ldots\ldots\ldots& \text{77,100} & \text{80,750}\\
\text{Inventory}\ldots\ldots\ldots & \text{240,600} & \text{250,700}\\
\text{Prepaid expenses } \ldots\ldots\ldots& \text{15,100} & \text{17,000}\\
\text{Total current assets} \ldots\ldots\ldots& \text{456,250} & \text{410,000}\\
\text{Equipment} \ldots\ldots\ldots & \text{262,250} & \text{200,000}\\
\text{Accum. depreciation—Equipment} \ldots\ldots\ldots & \text{(110,750)} & \text{(95,000)}\\
\text{Total assets} \ldots\ldots\ldots& \text{\$607,750} & \text{\$515,000}\\
\text{Liabilities and Equity}\\
\text{Accounts payable} \ldots\ldots\ldots& \text{\$ 17,75} & \text{\$102,000}\\
\text{Short-term notes payable} \ldots\ldots\ldots& \text{15,000} & \text{10,000}\\
\text{Total current liabilities} \ldots\ldots\ldots& \text{32,750} & \text{112,000}\\
\text{Long-term notes payable} \ldots\ldots\ldots& \text{100,000} & \text{77,500}\\
\text{Total liabilities} \ldots\ldots\ldots & \text{132,750} & \text{189,500}\\
\text{Equity}\\
\text{Common stock, \$5 par} \ldots\ldots\ldots& \text{215,000} & \text{200,000}\\
\text{Paid-in capital in excess of par, common stock} \ldots\ldots\ldots& \text{30,000} & \text{0}\\
\text{Retained earnings} \ldots\ldots\ldots& \text{230,000} & \text{125,500}\\
\text{Total liabilities and equity} \ldots\ldots\ldots& \text{\$607,750} & \text{\$515,000}\\
\end{matrix}
$$
$$
\begin{matrix}
\text{GAZELLE CORPORATION Income Statement For Year Ended December 31, 2017}\\
\text{Sales} \ldots\ldots\ldots& \quad & \text{\$1,185,000}\\
\text{Cost of goods sold} \ldots\ldots\ldots& \quad & \text{595,000}\\
\text{Gross profit } \ldots\ldots\ldots& \quad & \text{590,000}\\
\text{Operating expenses}\\
\text{Depreciation expense} \ldots\ldots\ldots& \text{\$ 38,600}\\
\text{Other expenses} \ldots\ldots\ldots& \text{362,850}\\
\text{Total operating expenses} \ldots\ldots\ldots& \quad & \text{401,450}\\
\quad & \quad & \text{188,550}\\
\text{Other gains (losses)}\\
\text{Loss on sale of equipment} \ldots\ldots\ldots & \quad & \text{(2,100)}\\
\text{Income before taxes} \ldots\ldots\ldots & \quad & \text{186,450}\\
\text{Income taxes expense } \ldots\ldots\ldots & \quad & \text{28,350}\\
\text{Net income} \ldots\ldots\ldots & \quad & \text{\$ 158,100}\\
\end{matrix}
$$
Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $2,100 (details in b). b. Sold equipment costing$51,000, with accumulated depreciation of $22,850, for$26,050 cash. c. Purchased equipment costing $113,250 by paying$43,250 cash and signing a long-term note payable for the balance. d. Borrowed $5,000 cash by signing a short-term note payable. e. Paid$47,500 cash to reduce the long-term notes payable. f. Issued 3,000 shares of common stock for $15 cash per share. g. Declared and paid cash dividends of$53,600. 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. Disclose any noncash investing and financing activities in a note. 2. Analyze and discuss the statement of cash flows prepared in part 1, giving special attention to the wisdom of the cash dividend payment.