Melody Lane Music Company was started by John Ross early in 2021. Initial capital was acquired by issuing shares of common stock to various investors and by obtaining a bank loan. The company operates a retail store that sells records, tapes, and compact discs. Business was so good during the first year of operations that John is considering opening a second store. The funds necessary for expansion will come from a new bank loan. In order to approve the loan, the bank requires financial statements. A. Cash receipts consisted of the following: from customers $360,000, from issue of common stock $100,000, from bank loan $100,000 B. Cash disbursements were as follows: purchase odf inventory $300,000, rent $15,000, Salaries $30,000, Utilities $5,000, Insurance $3,000, Purchase of equipment $40,0000 C. The bank loan was made on March 31,2021. A note was signed requiring payment of interest and principle on March 31,2022. The interest rate is 12% D. The equipment was purchased on January 3, 2021, and has an estimated useful life of 10 years and no anticipated salvage value E Inventory on hand at the end of the year cost $100,000 F. Amounts owed at Dec 31, 2021 To suppliers of invnetory $20,000 and the utility company $1,000 G. Rent on the store building is $1,000 per month. On December 1, 2021, four months rent was paid in advance H. Net income for the year was $76,000. Assume that the company is not subject to federal, state, or local income tax I. One hundered thousand shares of no par common stock was authorized, of which 20,000 shares were issued and are outstanding Required: Prepare a balance sheet at December 31, 2021
Melody Lane Music Company was started by John Ross early in 2021. Initial capital was acquired by issuing shares of common stock to various investors and by obtaining a bank loan. The company operates a retail store that sells records, tapes, and compact discs. Business was so good during the first year of operations that John is considering opening a second store. The funds necessary for expansion will come from a new bank loan. In order to approve the loan, the bank requires financial statements.
A. Cash receipts consisted of the following:
from customers $360,000, from issue of common stock $100,000, from bank loan $100,000
B. Cash disbursements were as follows:
purchase odf inventory $300,000, rent $15,000, Salaries $30,000, Utilities $5,000, Insurance $3,000, Purchase of equipment $40,0000
C. The bank loan was made on March 31,2021. A note was signed requiring payment of interest and principle on March 31,2022. The interest rate is 12%
D. The equipment was purchased on January 3, 2021, and has an estimated useful life of 10 years and no anticipated salvage value
E Inventory on hand at the end of the year cost $100,000
F. Amounts owed at Dec 31, 2021
To suppliers of invnetory $20,000 and the utility company $1,000
G. Rent on the store building is $1,000 per month. On December 1, 2021, four months rent was paid in advance
H. Net income for the year was $76,000. Assume that the company is not subject to federal, state, or local income tax
I. One hundered thousand shares of no par common stock was authorized, of which 20,000 shares were issued and are outstanding
Required:
Prepare a
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