ABBOTT KINDERGARTEN

At the end of six months of activity, Mrs Frances Nissen Abbott wanted to analyze the results of the nursery's activities. He wondered what the company's status as of December 31, 2019 was and what its future might be.

The Abbott nursery was set up in early 2019. Mrs. Nissen ran the company. The company provided services related to the care of children of working mothers, pre-school education, breakfast and lunches. In order to invest her own share of the partnership, Ms. Nissen mortgaged her house for $ 15,000. He bought the company's stock with $ 13,000 of that money. A friend of Ms. Nissen's also took $ 7,000 in cash from the stock. An official agency had loaned the nest $ 3,000 to be paid at the end of a year.

With these funds, the company purchased $ 25,000 of real estate, including a plot of land for $ 5,000 and a building on the plot for $ 20,000. For this purchase, the mortgage was owed $ 16,000 and the balance was paid in advance. Interest on the mortgage debt would be paid in quarterly terms, no payment would be made for the main debt before the company's incorporation was completed. At the same time, $ 8,200 in advance was received for the nest, as well as flooring and fixtures. The following additional cash payments were made for the first six months ended December 31, 2019.

Mrs. Nissen's fee* $ 5,000

Partial day employee pay 3,200

Insurance and taxes 840

Heating and light 637

Food and supplies 2,624

Interest and miscellaneous payments 2.276

Total payments $ 14,577

A collection of $ 10,500 was made for the services offered. Another $ 300 would be taken from the children's parents. On December 31, 2019, $ 200 worth of unfulfilled food supplies were obtained. The company owed $ 260 to the person who sold the food supplies.

According to Ms. Nissen, who is considering future activities, the fee charged to children in the next six months, which ends June 30, will be $ 16,000 (excluding the $ 300 expected from the first six months). This amount was more than the first six months as there were no more children.

Again, he estimated that $ 8,000 would be paid for the fees. It was estimated that the advance payment for heat and light would be around $ 800 (since there would be colder weather than in the first six months). A cash outflow of $ 3,500 for new food and supplies and $ 1700 for interest and various payments ( lower than the first six months because some fixed expenses were paid at the first start) would be made. Ms. Nissen would also repay the debt to the official organization by the end of this term.

Nissen estimates that by June 30, the company would have $ 200 in food supplies, but there would be no debt due to purchases of food and supplies. No new payment would be required for insurance and taxes. Because the amounts paid in the first six months covered a 1-year period.

Ms. Nissen knew that various companies made depreciation records for buildings, flooring and fixtures. But at that time, a person who wanted to buy the company valued the assets at $ 35,000 in advance. According to Ms. Nissen, it was no longer necessary to make depreciation records in these circumstances.

QUESTIONS:

1. Edit Abbott nursery's balance sheet for December 31, 2019. (It is recommended that you evaluate each event separately to reduce error. Monitor events affecting equity other than the first invested share under the name non-distributed profits. Show fixed assets with initial costs). December 1 January December 31, 2019 profit or loss table of Abbott Nursery also edit.

2. January June June 30, 2020 pro forma (estimated) balance sheet and the period January 1 June 30, 2020 pro forma (estimated) profit or loss statement edit.

Robert N. Anthony ve James S. Reece, Accounting Text and Cases, 6. (Homewood, Illnois: Richard D. Irwin, Inc., 1979) s.5153.