Dog Concierges, Llc Case Solution

Module 2 Case Study - Dog Concierges, LLC:

Group 11

Complete the case: Dog Concierges, LLC: Transaction Analysis and Statement of Cash Flows Preparation. 

1. In Part I of this assignment, describe how each Common Business Event listed on page 2 of the case affects the components presented in Exhibit 1 (on page 4). For example, if Dog Concierges sold capital stock for $15,000 to three investors, both cash (an asset) and contributed capital (owner’s equity) will increase by $15,000, thereby balancing the accounting equation.
2. In Part II of this case, create a statement of cash flows using data reported in Exhibits 2 and 3.
3. For Part III of the case, use the statement of cash flows (presented in Exhibit 5) and the balance sheet as of the end of the previous year  (see Exhibit 2) to re-create the balance sheet for the year ended two years earlier.

1. Common Business Events:

• Sold capital stock for $15,000 to three investors.

1. Assets (cash) and equity (contributed capital) would increase by $15,000.

• Purchased $55,000 of product raw material on account from suppliers.

1. Assets (raw materials) and liabilities increased by $55,000.

• Sold products for $40,000 cash that had cost $29,000 to make.

1. Assets (cash) and equity (revenue) increased by $40,000.
2. Assets (inventory) and equity decreased by $29,000.

• Borrowed $30,000 from the bank, due in 120 days, with an interest rate of 6%.

1. Liabilities and current assets increased by $30,000.

• Collected a $4,500 account receivable from a veterinarian customer.

1. Current assets increased by $4,500 and noncurrent assets decreased by $4,500.

• Bought a used pickup truck for $8,000 cash.

1. Current assets decreased by $8,000 and noncurrent assets increased by $8,000.

• Disbursed cash dividends of $1,500 to owners.

1. Current assets and equity decreased by $1,500.

• Paid a $2,500 account payable owed to a supplier.

1. Current assets and liabilities decreased by $2,500.

• Recognized $3,500 annual depreciation on a small warehouse the company owned.

1. Noncurrent assets and equity decrease by $3,500.

• Sold an old shed no longer needed that had a recorded cost of $14,000 for $17,500 cash.

1. Current assets and equity increased by $17,500.
2. Noncurrent assets and equity decreased by $14,000.

• Accrued 90 days of interest on the bank loan.

1. Liabilities increased by $1,350 and equity decreased by $1,350.

1. Statement of Cash Flows:

Net Income                             $25,000

Depreciation                            45,000

Accounts receivable              (10,000)

Inventory                                (20,000)

Accounts payable                    50,000

Taxes payable                         (10,000)

Operations Cash Flows          80,000

Building                                    40,000