Prepare Financial Income Statement, Statement of Retained Earnings, & Balance Sheet based on the following information:On 3/1/21, the company purchased a large fishing boat for $20,000 of which had a down payment of $5,000 and the rest of borrowed from First Hawaiian Bank. The Note Payable’s principle has a 4% annual interest rate due every 8-months while the principle is due at maturity date in 5 years. The boat has a useful life of 10 years and salvage of $4,000. Straight-line depreciation method is used.Liability insurance was purchased on 5/1/21. The 18 month policy cost $4,600 and was paid in full.Shark Bait purchased $12,000 of office supplies and lures from Huge Minnows Company on 4/1/21 on account. Also, on 11/5/21, Shark Bait received $3,400 cash for the sale of some unused lures that were bought on 4/1/21 for $2,900. On 12/31/21, due to the use of office supplies, the Office Supplies and lures only added up to $2,000.On 6/1/21, Shark Bait received $10,000 cash for a tour that would take place on 2/4/22. On 12/30/21, 50% of the services were provided early from the customers that paid cash on 6/1/21.

In the given situation, transactions for Shark Bait for the year are given. We need to prepare the…

Answered: he company purchased a large fishing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Prepare Financial Income Statement, Statement of Retained Earnings, & Balance Sheet based on the following information:

On 3/1/21, the company purchased a large fishing boat for $20,000 of which had a down payment of $5,000 and the rest of borrowed from First Hawaiian Bank. The Note Payable’s principle has a 4% annual interest rate due every 8-months while the principle is due at maturity date in 5 years. The boat has a useful life of 10 years and salvage of $4,000. Straight-line depreciation method is used.

Liability insurance was purchased on 5/1/21. The 18 month policy cost $4,600 and was paid in full.
Shark Bait purchased $12,000 of office supplies and lures from Huge Minnows Company on 4/1/21 on account. Also, on 11/5/21, Shark Bait received $3,400 cash for the sale of some unused lures that were bought on 4/1/21 for $2,900. On 12/31/21, due to the use of office supplies, the Office Supplies and lures only added up to $2,000.
On 6/1/21, Shark Bait received $10,000 cash for a tour that would take place on 2/4/22. On 12/30/21, 50% of the services were provided early from the customers that paid cash on 6/1/21.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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