Assume all transactions in cash unless otherwise noted.

50,000 shares of common stock (par 1.00) issued at 80/Share.

Inventory includes the following: Beginning balance of $0; Purchases Include: 1/1 $50,000 - (2,000 units at $25). $46,000 (1,000 units of inventory on June 1 for $46/unit); and $90,000 (3,000 units on December 1 for $30/unit. 3,500 units were sold for $190/unit on December 20^th. $450,000 in cash was received and the remaining will be collected in the following year. The rate used for determining uncollectible has been set at 5% of gross credit sales. Both Accounts receivable and the related Allowance have a zero beginning balance. The company uses LIFO.

On 1/1 we signed a note on for $1,000,000. We agreed to pay back the note at the end and all interest. The rate of interest is 5%. We will pay back all interest and principal on 1/1/x5

Supplies at the beginning of the year was $0. The amount of supplies purchased was $40,000. End of the year supply count showed that there was a $20,000 balance.

Equipment-A was purchased at the beginning of the year for $300,000. $20,000 of salvage/residual value. Declining Balance depreciation is used over a 10 year life.

Equipment-B was purchased on 5/1/x1 for $100,000. $20,000 of salvage/residual value. Straight line depreciation is used over a 5 year life. This asset was sold for $90,000 cash on 10/31/x1.

Building was purchased at the beginning of the year for $400,000. Salvage value was $20,000. Straight-line is used over a 20 year life. We paid cash.

We needed funds, so we signed a note on 7/1 for $600,000. We agreed to pay back the note at the end and all interest on 2/28/x2. The rate of interest is 6%.

For purposes of the balanced sheet we have authorized 100,000 shares of common stock, but only 50,000 shares of common stock are issued.

We have 2 employees. We paid them a total of salary expense $39,000 (gross pay) to date. An end of the year adjustment requires us to accrue a $1,000 more of salary expense this year, which is to be paid next year. FICA is 7.65%. No federal or state income tax is withheld. No FICA tax has been paid to the government. Rent Expense for the year was $24,000.

Throughout the year we sold and delivered $500,000 in services. On November 1, we received $144,000 cash for future services. The services will be performed evenly over the next year (12 months).

We declared but did not pay dividends of $50,000. The tax rate is 21%.

1. Prepare journal entries (including closing)
2. Prepare financial statements