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ASTRO Inc. Statement of Financial Position December 31, 2018 Assets Liabilities Cash $259,000 Notes Payable 8%...

ASTRO Inc.

Statement of Financial Position

December 31, 2018

Assets Liabilities

Cash $259,000 Notes Payable 8% $60,000

Inventory $6,000 Accounts Payable $40,000

Prepaid Insurance $3,000 Total $100,000

Supplies $4,000 Common Stock $5 par $140,000

Land $6,000 Excess of par $60,000

Building $480,000 Retained earnings $418,000

Acc. Depr. ( $40,000) $440,000 Total $618,000

Total Assets $718,000 Total Liabilities & Equity $718,000

You are asked to prepare, in good financial form, a set of financial statements for Saratoga Inc. for the quarter ending 3/31/2019.

Jan. 1 – ASTRO purchased equipment for $70,000 and signed a note for the entire cost. The interest rate on the note is 6%. This loan requires monthly payments of $2,000. Monthly payments include interest and principle. Useful life is 5 years.

Jan. 1 – ASTRO purchased on this date for $100,000. Useful life for this machine is 10 years. ASTRO elected to sign a note for the full amount of the purchase price. The note has a 10% rate of interest. Payment on the note will be yearly and the first payment is due December 31, 2019.

Jan. 10 – Purchased $80,000 of inventory. The company paid in full on this date.

Jan. 15 – Issued 200,000 shares of common stock of ASTRO Inc. for $12 per share. All cash received on this date.

Jan. 20 – ASTRO purchased $50,000 of inventory on account.

Jan. 27 – Sales to a customer amounted to $590,000. Received $18,000 in cash on this date.

Feb. 1 – ASTRO made a $2,000 monthly note payment in cash. This note was created on January 1, 2019.

Feb. 15 – Salary and wage expense were paid in the amount of $26,000.

Feb. 27 – The $2,000 monthly note payment was made. This note was entered into Jan. 1, 2019.

Feb. 27 – Received payment in full for the sales generated on Jan. 27, 2019.

Mar. 15 – ASTRO paid $9,000 for advertising.

Mar. 18 – Dividends declared to shareholders for record owners on March 31, 2019 - to be paid on April 1, 2019. The amount of the dividend is $1 per share.

Mar. 31 – Salary and wages paid in the amount of $5,000.

Mar. 31 – Supply Inventory was $1,000.

Mar. 31 - Sales to customer amounted to $35,000 and no discounts were given. Cash was received for the full price.

Mar. 31 - Inventory [merchandise] at March 31, 2019 was $10,000.

Mar. 31 - ASTRO paid wages of $23,000 this date

Mar. 31 - Assume the tax rate is 15% for ASTRO Inc.

Mar. 31 – ASSUME that the prepaid insurance of $3,000 listed on the balance sheet dated December 31, 2018 is the cost of the insurance policy from January 1, 2019 to December 31, 2019.

Building has a useful life of 20 years.

CREATE the following

Statement of Revenue & Expenses {Income statement}

Statement of Retained Earnings

Statement of Financial Position {Balance Sheet}

Tee accounts

All Journal Entries

Solutions

Expert Solution

Sr No. Particulars Debit Credit
1-Jan Equipment 70000
Notes Payable 6% 70000
1-Jan Machine 100000
Notes Payable 10% 100000
10-Jan Inventory 80000
Cash 80000
15-Jan Cash 2400000
Common stock 2400000
20-Jan Inventory 50000
Account payable 50000
27-Jan Cash 18000
Account receivable 572000
Sales revenue 590000
1-Feb Interest 350
Notes Payable 6% 1650
Cash 2000
(70000 * 6%) / 12 = 350
15-Feb Salary and wages expense 26000
Cash 26000
27-Feb Interest 350
Notes Payable 6% 1650
Cash 2000
(70000 * 6%) / 12 = 350
27-Feb Cash 572000
Account receivable 572000
15-Mar Advertisment expense 9000
Cash 9000
18-Mar Dividend 228000
Retained earning 228000
$ 140000 / 5 Par = 28000 shares + 200000 shares issued = Total dividend = 228000*1 = 228000
31-Mar Salary and wages expense 5000
Cash 5000
31-Mar Supply expense 3000
Supply inventory 3000
(opening 4000 - 1000)
31-Mar Cash 35000
Sales revenue 35000
31-Mar COGS 126000
Inventory 126000
(Opening (6000) + Purchase (80000+50000)-closing (10000) =
31-Mar Wages 23000
Cash 23000
31-Mar Insurance expense 750
Prepaid insurance 750
(3000/12)*3 = 750
31-Mar Depreciation Machine (70000/5)*3/12 = 3500
Depreciation Equipment(100000/10)*3/12= 2500
Depreciation Building (480000/20)*3/12= 6000
Accumulated depreciation 12000
Cash
Debit Credit
Date Particular Amount Date Particular Amount
1-Jan Opening 259000 10-Jan Inventory 80000
15-Jan Common stock 2400000 1-Feb Notes payable 1650
Sales revenue 18000 1-Feb Interest 350
27-Feb Accounts receivable 572000 27-Feb Notes payable 1350
31-Mar Sales revenue 35000 27-Feb Interest 350
15-Feb Salary and wages 26000
15-Mar Advertisment 9000
31-Mar Salary and wages 5000
31-Mar Salary and wages 23000
3284000 146700
Debit Balance 3137300
Inventory
Debit Credit
Date Particular Amount Date Particular Amount
1-Jul Opening 6000 31-Mar COGS 126000
10-Jan Inventory 80000
20-Jan Notes payable 50000
136000 126000
Debit Balance 10000
Notes Payable
Debit Credit
Date Particular Amount Date Particular Amount
1-Feb Cash 1650 1-Jan Opening 60000
27-Feb Cash 1650 1-Jan Equipment 70000
1-Jan Machine 100000
3300 230000
Credit Balance 226700
Common stock
Debit Credit
Date Particular Amount Date Particular Amount
1-Jan Opening 200000
15-Jan Cash 2400000
0 2600000
Credit Balance 2600000
Prepaid expense
Debit Credit
Date Particular Amount Date Particular Amount
1-Jan Opening 3000 Insurance expense 750
3000 750
Debit Balance 2250
Supplies
Debit Credit
Date Particular Amount Date Particular Amount
1-Jan Opening 4000 Supply expense 3000
4000 3000
Debit Balance 1000
Depreciation
Debit Credit
Date Particular Amount Date Particular Amount
31-Mar Dep. Machine 3500
Dep. Equip 2500
Dep. Building 6000 0
Debit Balance 12000
Interest
Debit Credit
Date Particular Amount Date Particular Amount
1-Feb Cash 350
27-Feb Cash 350
700 0
Debit Balance 700
Accounts Payable
Debit Credit
Date Particular Amount Date Particular Amount
1-Jan Opening 40000
inventory 50000
0 90000
Credit Balance 90000
Accumulated depreciation
Debit Credit
Date Particular Amount Date Particular Amount
1-Jan Opening 40000
31-Mar Dep. 12000
0 52000
Credit Balance 52000
Accounts receivable
Debit Credit
Date Particular Amount Date Particular Amount
27-Jan Inventroy 572000 Cash 572000
572000 572000
Debit Balance 0
Statement of revenue and expense
Sales revenue 625000
Less: COGS -126000
Gross income 499000
Expenses
Salary and wages expense -54000
Interest expense -700
Advirtisment expense -9000
Supply expense -3000
Insurance expense -750
Depreciation expense -12000
Net income 419550
Less Tax Expense (15%) -62932.5
Income after tax 356617.5
Balance sheet
Asset
Cash 3137000
Inventory 10000
Prepaid insurance 2250
Supplies 1000
Land 6000
Building 480000
Machine 70000
Equipment 100000
Accumulated depreciation -52000
Total 3754250
Liability
Notes Payable 226700
Accounts Payable 90000
Equity
Common stock 2600000
Retained earning 546617.5
Proposed dividend 228000
Tax payable 62932.5
3754250
Statement of retained earning 0
Opening retained earning 418000
Less: Proposed dividend 228000
Add: Income statement 356617.5
Closing retained earning 546617.5

ekkarill92 answered 1 year ago
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