Question

4) Using the balance sheet from #3, construct an income statement and balance sheet for
the first month of operation, given the following information:
	Sales			$104,000.00
	Collections			$77,000.00
	Purchases (paid for half)			$60,000.00
	Ending inventory			$57,000.00
	Equipment Depreciation			$18,000.00
	Vehicle Depreciation			$2,000.00
	Heat (due next month)			$450.00
	Electricity			$325.00
	Telephone			$230.00
	Advertising			$1,200.00
	Salaries			$15,500.00
	Payroll Tax Expense			$1,700.00
	Office Supplies			$200.00
	Insurance (due next month)			$1,250.00
	Loan payment			$3,500.00
	principal			$1,500.00
	interest			$2,000.00
	Legal fees (due next month)			$500.00
	Accounting			$250.00
	Vehicle Expense			$700.00
	Repairs & Maintenance			$1,500.00
	Owner Draw			$3,000.00

Answer 1

Income Statement for the Month End
Revenues	104000
Total Revenue		104000
Purchases	60000
Electricity	325
Telephone	230
Advertising	1200
Salaries	15500
Office Supplies	200
Loan Payment	3500
Accounting	250
Vehicle Expense	700
Repairs & Maintenance	1500
Owner Drawing	3000
Depreciation	20000
Total Expenses		106405
Earnings Before Tax		-2405
Tax		1700
Net Loss		-4105

Balance Sheet at the Month End

Assets
Cash	16695
Short Term Receivable	27000
Inventories	57000
Prepaid Expenses	2200
Total Assets		102895
Liabilities
Short Term Debt	30000
Total Liabilities		30000
Equity
Common Stock	80000
Owners Draw	-3000
Retained earnings (Loss)	-4105
Total Equity		72895