Question
Bee-Bop Music Service was organized by Whitney Dallas and other investors on January 1. 2018. On that date the investors exchanged $136,000 cash for all
Bee-Bop Music Service was organized by Whitney Dallas and other investors on January 1. 2018.
On that date the investors exchanged $136,000 cash for all of the stock of the company. On that same day, the corporation borrowed $110,000 from a local bank and signed a 5 -year note payable. The interest is payable each December 31. On January 1, 2018, the corporation purchased service supplies for $80,000. Operations started immediately.
At the end of 2018, the corporation had completed the following additional business transactions:
1) Performed services and billed customers for $200,500 of which $194,500 was collected in cash at the end of the year.
2) Used up $25,000 of service supplies while rendering services.
3) Paid $84,000 cash for other service expenses.
4) Paid $2,200 in annual interest expense on the note payable.
5) Paid $18,000 of income taxes in cash to the IRS.
Complete the following income statement and balance sheet
Revenues:
Service Revenue
Expenses:
Service Expenses
Interest Expense
Total Expense
Pretax Income
Income Expense
Net Income
Balance Sheet
ASSETS:
Cash
Accounts Receivable
Service Supplies
TOTAL ASSETS:
LIABILITIES:
Note Payable
Total Liabilities
STOCKHOLDERS' EQUITY:
Contributed Capital
Retained Earnings
Total Stockholders' Equity
TOTAL LIABILITIES & S.E.
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