John Smith starts an incorporated an online music store called Music mart Inc. on 1st January, 2019 as ‘One Person Company'. He does this by depositing $25,000 of his funds in bank account that he has opened in the name of the business entity and taking $25,000 of stock certificates in return from the company. Further transactions are as under: 1. Music Mart borrows $12,500 from a bank on January 2; the loan is evidenced by a legal document. 2. The business buys inventory worth $5,000 on January 3 by paying cash. 3. On January 4th, store sells merchandise costing $500 for $ 750 for cash. 4. The store purchased and received merchandise for inventory for $5,000, agreeing to pay within 30 days. 5. Merchandise costing $1,500 was sold for $2,300, which was received in cash 6. Merchandise costing $1,700 was sold for $2,620 the customers agreeing to pay $2,620 within 30 days. 7. The store purchased a three-year fire insurance policy for $1,224, paying cash. 8. The store purchased two lots of land of equal size for a total of 24,000. It paid $6,000 in cash and gave a 10- year mortgage for $18,000. 9. The store sold one of the two lots of land for $12,000. It received $3,000 cash, and in addition, the buyer assumed $9,000 of the mortgage; that is Music Mart, Inc., became no longer responsible for this half. 10. Smith withdrew $1,000 cash from the store’s bank account treating it as a share of profit. 11. Smith took merchandise costing $750 from the store’s inventory treating it as a share of profit. 12. Smith leaned that the individual who purchased the land (No. 8 above) subsequently sold it for $14,000. The lot still owned by Music Mart, Inc., was identical in value with this other plot. 13. The store paid off $5,000 of its Creditors. 14. Smith sold one-third of the stock he owned in Music Mart, Inc., for $11,000 cash. 15. Merchandise costing $850 was lost in fire. Insurance company has admitted the claim, but has not yet disbursed it. Q. Prepare balance sheet
John Smith starts an incorporated an online music store called Music mart Inc. on 1st January, 2019 as ‘One Person Company'. He does this by depositing $25,000 of his funds in bank account that he has opened in the name of the business entity and taking $25,000 of stock certificates in return from the company. Further transactions are as under:
1. Music Mart borrows $12,500 from a bank on January 2; the loan is evidenced by a legal document. 2. The business buys inventory worth $5,000 on January 3 by paying cash.
3. On January 4th, store sells merchandise costing $500 for $ 750 for cash.
4. The store purchased and received merchandise for inventory for $5,000, agreeing to pay within 30 days.
5. Merchandise costing $1,500 was sold for $2,300, which was received in cash
6. Merchandise costing $1,700 was sold for $2,620 the customers agreeing to pay $2,620 within 30 days.
7. The store purchased a three-year fire insurance policy for $1,224, paying cash.
8. The store purchased two lots of land of equal size for a total of 24,000. It paid $6,000 in cash and gave a 10- year mortgage for $18,000.
9. The store sold one of the two lots of land for $12,000. It received $3,000 cash, and in addition, the buyer assumed $9,000 of the mortgage; that is Music Mart, Inc., became no longer responsible for this half.
10. Smith withdrew $1,000 cash from the store’s bank account treating it as a share of profit.
11. Smith took merchandise costing $750 from the store’s inventory treating it as a share of profit. 12. Smith leaned that the individual who purchased the land (No. 8 above) subsequently sold it for $14,000. The lot still owned by Music Mart, Inc., was identical in value with this other plot.
13. The store paid off $5,000 of its Creditors.
14. Smith sold one-third of the stock he owned in Music Mart, Inc., for $11,000 cash.
15. Merchandise costing $850 was lost in fire. Insurance company has admitted the claim, but has not yet disbursed it.
Q. Prepare
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