You have decided to start a business selling pet toys. You form a corporation, Happy Pets, Inc. You (the shareholder) paid $100 per share for 5,000 shares of stock on January 1, 20X0. The company borrowed $75,000 from the bank. The note says the company agrees to pay back that amount on December 31, 20X5 and the interest rate is 10%. The company bought 60,000 toys for $3 each. It sold 40,000 toys for $8 each. The company also paid wages of $40,000, advertising expense of $2,000, and rent, $12,000, and paid the interest. At the end of the year the company owed its employee $8,000. The company bought a delivery van on December 31st that cost $20,000 paying cash for the total amount. On July 1 the company sold an other 1,000 shares of stock for $100 each. On December 31 the company paid a $10,000 dividend. The tax rate is 30% and the taxes were paid in 20X0. Prepare T accounts and financial statements.

You have decided to start a business selling pet toys. You form a corporation, Happy Pets, Inc. You (the shareholder) paid $100 per share for 5,000 shares of stock on January 1, 20X0. The company borrowed $75,000 from the bank. The note says the company agrees to pay back that amount on December 31, 20X5 and the interest rate is 10%. The company bought 60,000 toys for $3 each. It sold 40,000 toys for $8 each. The company also paid wages of $40,000, advertising expense of $2,000, and rent, $12,000, and paid the interest. At the end of the year the company owed its employee $8,000. The company bought a delivery van on December 31st that cost $20,000 paying cash for the total amount. On July 1 the company sold an other 1,000 shares of stock for $100 each. On December 31 the company paid a $10,000 dividend. The tax rate is 30% and the taxes were paid in 20X0. Prepare T accounts and financial statements.

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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