Module 6 Jett Marketing - Solution

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Institute of Health Profession Education & Research, KMU Peshawar *

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Accounting

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Nov 24, 2024

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Accounting For Managers Module 6 Assignment Jett Marketing, LLC Introduction & Information General Directions: Financial Statements Income Statement Jett Marketing, LLC Period Ending X/XX/XXXX Account Name Amount Revenue Consulting $500,000 Materials $75,000 Cost of Goods Sold $273,000 Jett Marketing, LLC is a marketing consulting firm that works with clients throughout while keeping the cost of advertising affordable. This is achieved with targeted mark Over the past year, Jett Marketing, LLC has been having difficulty in managing their c company is having trouble maintaining their cash from month to month. According statements look good, cash flow is a constant area of struggle, and is measured only process. As a member of the accounting team, you have been asked to use the data from the you use both the direct method and the indirect method, “just to see how they com terms of cash management. Using the information provided, classify the activities done by Jett Marketing, LLC as statements to create a statement of cash flows for the company using both the indir In addition to the data found on the financial statements, the following transactions - Purchased new computer equipment for the office in the amount of $90,000 - Sold unused office furniture in the amount of $10,000 - Attained a short term note payable in the amount of $50,000

Gross Revenue $302,000 Expenses Salary Expense $107,195 Office Supplies Expense $5,000 Utilities $3,200 Depreciation Expense $21,060 Insurance Expense $4,900 Public Events Expense $2,000 Travel Expense $6,200 Interest Expense $750 Professional Services $3,400 Advertising $2,600 Miscellaneous $3,500 Total Expenses $159,805 Tax Expense $23,250 Other Gains/Losses Sale of furniture ($2,000) Net Income/Loss $116,945

Balance Sheet Jett Marketing, LLC Period Ending X/XX/XXXX Assets Current Year Previous year Liabilities Current Assets Current Liabilities Cash $102,147 $168,337 Accounts Payable Accounts Receivable $60,500 $50,300 Short Term Note Payable Inventory $100,000 $88,000 t the globe. The company specializes in helping clients that need to increase their exposure in order to grow th keting designed to reach the client’s customer base through research and data driven ad choices. cash flow. The company is profitable on the income statement, has more assets than liabilities on the balance s to the company’s owner, “ The money will be there, it is just not there yet.” While the numbers on these other y by how much cash is in the account. A formal cash flow statement has not been created as part of the financi e latest income statement and balance sheet to create a cash flow statement for the company. Your supervisor mpare”. Once this information on cash flow is available, it can be reviewed to help determine next steps for the s being operating, investing or financing activities. Apply these classifications and the information in the previou rect and the direct methods. s occurred for Jett Marketing, LLC between the previous and current year.

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Supplies $0 $0 Total Current Liabilities Prepaid Expenses $2,000 $2,500 Long Term Liabilities Total Current Assets $264,647 $309,137 Long Term Note Payable Property, Plant & Equipment Total Long Term Liabilities Land $75,000 $75,000 Buildings & Improvements $60,000 $60,000 Total Liabilities Office Furniture $12,000 $25,000 Computer Equipment $102,000 $12,000 Shareholders Equity Accumulated Depreciation ($48,625) ($46,000) Common Stock Total Property, Plant & Equipment $200,375 $126,000 Total Liabilities & Shareholders Total Assets $465,022 $435,137 Sale of Office Furniture $8,000 Asset value of office furniture $10,000 Net gain/loss on furniture -$2,000

Current Year Previous year $110,022 $125,137 $50,000 $0 heir business sheet, yet the r two ial reporting r has asked that company in us financial

$160,022 $125,137 $55,000 $60,000 $55,000 $60,000 $215,022 $185,137 $250,000 $250,000 $465,022 $435,137 $0 $0

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Part 1: Classification of Activities Directions: For each accounting activity described below, determine if it is an operating activity, investing activity, or a Activity Classification Investing Operating Prepaid liability insurance for the year Operating Investing Issued payroll for current pay cycle Operating Operating Operating Financing You are working on creating the Cash Flow Statement for Jett Marketing, LLC. The first step of this process if so, what area of the cash flow statement these items should be recorded. Below are the financial statem Purchased new computer equipment for the office in the amount of $90,000 Collected $500 in finance charges from a client's late payment Sold unused office furniture in the amount of $10,000 Collected $12,000 prepayment for client consulting services Reimbursed employee for travel to meet with a client Attained a short term note payable in the amount of $50,000

a financing activity. Use the drop down box to select your response. s, now that you have the updated financial statements, is to determine what activities on the statements will imp ments for the company (same statement data as on Tab 1 – Overview).

pact cash flow, and

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Part 2: Indirect Method Cash Flow Statement With the information regarding what activities go under what section of the cash flow statement, you fe Directions: Recall the information on tab 1 - Overview (pasted below for your use). Using this information, create a Financial Statements Income Statement Jett Marketing, LLC Period Ending X/XX/XXXX Account Name Amount Revenue Consulting $500,000 Materials $75,000 Cost of Goods Sold $273,000 Gross Revenue $302,000 Expenses Salary Expense $107,195 Office Supplies Expense $5,000 Utilities $3,200 Depreciation Expense $21,060 Insurance Expense $4,900 Public Events Expense $2,000 Travel Expense $6,200 Interest Expense $750 Professional Services $3,400 Advertising $2,600 Miscellaneous $3,500 Total Expenses $159,805 Jett Marketing, LLC using the indirect method. In addition to the data found on the financial statements, the following transactions occurred for Jett Ma - Purchased new computer equipment for the office in the amount of $90,000 - Sold unused office furniture in the amount of $10,000 - Attained a short term note payable in the amount of $50,000

Tax Expense $23,250 Other Gains/Losses Sale of furniture ($2,000) Net Income/Loss $116,945 Cash Flow Statement Jett Marketing, LLC Period Ending X/XX/XXXX Operating Activities Net Income/Loss $116,945 Depreciation Expense $21,060 Sale of furniture $2,000 Change in working Capital Increase in Accounts Receivable ($10,200) Increase in Inventory ($12,000) Decrease in Prepaid Expenses $500 Decrease in Account Payable ($15,115) Cash from operating activities $103,190 Investing Activities Purchase of computer equipment ($90,000) Sold unused office furniture $8,000 Sale of Office Furniture $3,000 Purchase of Other Non-Current Assets ($18,435.00) Cash from Investing Activities ($97,435) Financing Activities Attained a short term note payable $50,000.00 Repayment of Long Term Note Payable ($5,000.00) Dividend Paid ($116,945.00) Cash from Financing Activities ($71,945) Net change in cash -$66,190 Cash balance Previous year $168,337 Cash balance current year $102,147

eel that you are now ready to move forward with creating your indirect cash flow sta a cash flow statement for Balance Sheet Jett Marketing, LLC Period Ending X/XX/XXXX Assets Current Year Previous year Difference Current Assets Cash $102,147 $168,337 ($66,190) Accounts Receivable $60,500 $50,300 $10,200 Inventory $100,000 $88,000 $12,000 Supplies $0 $0 $0 Prepaid Expenses $2,000 $2,500 ($500) Total Current Assets $264,647 $309,137 ($44,490) Property, Plant & Equipment Land $75,000 $75,000 $0 Buildings & Improvements $60,000 $60,000 $0 Office Furniture $12,000 $25,000 ($13,000) Computer Equipment $102,000 $12,000 $90,000 Accumulated Depreciation ($48,625) ($46,000) ($2,625) Total Property, Plant & Equipment $200,375 $126,000 $74,375 Total Assets $465,022 $435,137 $29,885 arketing, LLC between the previous and current year.

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Sale of Office Furniture $8,000 Asset value of office furniture $10,000 Net gain/loss on furniture -$2,000 Remember: Your net change in cash here should be the same as what you have abo

atement for Jett Marketing, LLC. Liabilities Current Year Previous year Difference Current Liabilities Accounts Payable $110,022 $125,137 ($15,115) Short Term Note Payable $50,000 $0 $50,000 Total Current Liabilities $160,022 $125,137 $34,885 Long Term Liabilities Long Term Note Payable $55,000 $60,000 ($5,000) Total Long Term Liabilities $55,000 $60,000 ($5,000) Total Liabilities $215,022 $185,137 $29,885 Shareholders Equity Common Stock $250,000 $250,000 $0 Total Liabilities & Shareholders Eq $465,022 $435,137 $29,885

ove in the balance sheet.

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Part 3: Direct Method Cash Flow Statement With the information regarding what activities go under what section of the cash flow statement, you fe Directions: Recall the information on tab 1 - Overview (pasted below for your use). Using this information, create a Jett Marketing, LLC using the indirect method. Financial Statements Income Statement Jett Marketing, LLC Period Ending X/XX/XXXX Account Name Amount Revenue Consulting $500,000 Materials $75,000 Cost of Goods Sold $273,000 Gross Revenue $302,000 Expenses Salary Expense $107,195 Office Supplies Expense $5,000 Utilities $3,200 Depreciation Expense $21,060 Insurance Expense $4,900 Public Events Expense $2,000 Travel Expense $6,200 Interest Expense $750 Professional Services $3,400 Advertising $2,600 Miscellaneous $3,500 Total Expenses $159,805 In addition to the data found on the financial statements, the following transactions occurred for Jett Ma - Purchased new computer equipment for the office in the amount of $90,000 - Sold unused office furniture in the amount of $10,000 - Attained a short term note payable in the amount of $50,000

Tax Expense $23,250 Other Gains/Losses Sale of furniture ($2,000) Net Income/Loss $116,945 Cash Flow Statement Jett Marketing, LLC Period Ending X/XX/XXXX Cash Flow from Operating Activities Cash Collected from Customer 564,800 Sales + dec Cash Paid for Expenses (138,245) total expen Cash Paid to Suppliers (300,115) COGS + inc Tax Paid (23,250) Net cash provided by operating activities 103,190 Investing Activities Purchase of computer equipment ($90,000.00) Sold unused office furniture $8,000 Sale of Office Furniture $3,000 Purchase of Other Non-Current Asse ($18,435) Cash from Investing Activities ($97,435) Financing Activities Noncurrent Liabilities Attained a short term note payable $50,000.00 Repayment of Long Term Note Paya ($5,000.00) Dividend Paid ($116,945.00) Cash from Financing Activities ($71,945) Net change in cash -$66,190 Cash balance Previous year $168,337 Cash balance current year $102,147

eel that you are now ready to move forward with creating your indirect cash flow statement for Jett Marketing, cash flow statement for Balance Sheet Jett Marketing, LLC Period Ending X/XX/XXXX Assets Current Year Previous year Liabilities Current Assets Current Liabilities Cash $102,147 $168,337 $66,190 Accounts Payable Accounts Receivable $60,500 $50,300 ($10,200) Short Term Note Payable Inventory $100,000 $88,000 ($12,000) Supplies $0 $0 $0 Total Current Liabilities Prepaid Expenses $2,000 $2,500 $500 Long Term Liabilities Total Current Assets $264,647 $309,137 Long Term Note Payable Property, Plant & Equipment Total Long Term Liabilities Land $75,000 $75,000 Buildings & Improvements $60,000 $60,000 Total Liabilities Office Furniture $12,000 $25,000 Computer Equipment $102,000 $12,000 Shareholders Equity Accumulated Depreciation ($48,625) ($46,000) Common Stock Total Property, Plant & Equipment $200,375 $126,000 Total Liabilities & Shareholders Eq Total Assets $465,022 $435,137 arketing, LLC between the previous and current year.

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Sale of Office Furniture $8,000 Asset value of office furniture $10,000 Net gain/loss on furniture -$2,000 crease in receivables nses - depreciation - decrease in prepaids or plus increase in prepaids crease in inventory + decrease in accounts payable Remember: Your net change in cash here should be the same as what you have above in the balance sheet.

, LLC. Current Yea revious year $110,022 $125,137 $15,115 $50,000 $0 ($50,000) $160,022 $125,137 $55,000 $60,000 $55,000 $60,000 $215,022 $185,137 $250,000 $250,000 $465,022 $435,137