Question: Prepare a balance sheet as of the end of the first month based on the information Mrs. Hiphop is going to open a music store with CDs. She has got USD 220 000 from her savings, which she wants to invest into her business and she has also received a bank loan in the amount of USD 40 000. She bought the equipment (USD 80 000), USD 160 000 she spent on the CDs. The space for the shop will be rented and she will pay the rent immediately in the month she uses the space i.e. June rent will be paid in June etc. We are at the end of the first month of her operations. She sold one half of her CDs sbought at the beginning to satisfy her customers. Individual customers paid in cash, but she also sold some CDs to disco clubs and these customers received invoices, which are due in two months. The table below summarizes her revenues in the first month: individual customers USD 90 000 disco club 1 USD 40 000 disco club 2 USD 50 000 At the end of the month Mrs. Hiphop paid in cash a rent (USD 25 000), bank loan interest (USD 1000) and her salary (USD 30 000) - everything paid and used during the first month. She has also received an invoice for utilities used during the first month (USD 2 000), which will be paid in 30 days. Equipment is depreciated using straight line method for 20 months starting from the first month (now). During the first month she bought and paid new material in the value of USD 50 000. Bank loan is not repaid at the moment, just the interest. Tax rate is 10% and will be paid immediately in cash.
Question: Prepare a balance sheet as of the end of the first month based on the information
Mrs. Hiphop is going to open a music store with CDs. She has got USD 220 000 from her savings, which she wants to invest into her business and she has also received a bank loan in the amount of USD 40 000. She bought the equipment (USD 80 000), USD 160 000 she spent on the CDs. The space for the shop will be rented and she will pay the rent immediately in the month she uses the space i.e. June rent will be paid in June etc.
We are at the end of the first month of her operations. She sold one half of her CDs sbought at the beginning to satisfy her customers. Individual customers paid in cash, but she also sold some CDs to disco clubs and these customers received invoices, which are due in two months. The table below summarizes her revenues in the first month:
individual customers USD 90 000
disco club 1 USD 40 000
disco club 2 USD 50 000
At the end of the month Mrs. Hiphop paid in cash a rent (USD 25 000), bank loan interest (USD 1000) and her salary (USD 30 000) - everything paid and used during the first month.
She has also received an invoice for utilities used during the first month (USD 2 000), which will be paid in 30 days. Equipment is
Bank loan is not repaid at the moment, just the interest. Tax rate is 10% and will be paid immediately in cash.
Step by step
Solved in 2 steps
