Food, Inc.

Balance Sheet

December 31, 2020

ASSETS:

Current Assets:

Cash $3,210,000

Prepaid Insurance 240,000

Inventory 1,200,000

Current Assets $4,650,000

Investments:

CD Investment 1,500,000

PPE:

Land 600,000

Building 4,400,000

Equipment 4,000,000

Total PPE 9,000,000

Intangibles:

Land Improvements 200,000

Patents 50,000

TOTAL ASSETS $15,400,000

LIABILITIES:

Current Liabilities:

Acct Payable- Brown Co $ 600,000

Long-Term Liabilities:

Notes Payable 1,400,000

Mortgage Payable 2,800,000

Total Liabilities $4,800,000

S/H Equity:

Contributed Capital:

Common Stock $1 par $ 300,000

APIC CS 6,100,000

Preferred Stock,5% $50 par 100,000

APIC- PS 4,100,000

Total S/H Equity $10,600,000

TOTAL LIABILITIES & S/H EQUITY $15,400,000

1. Your company is authorized to issue 5,000,000 shares of $1 par common stock and 2,000,000 shares of 5%, $50 par participating, preferred stock. We have issued 300,000 of common and 2,000 of preferred.

2. Your company is in a 20% tax bracket. Taxes are to be expensed in 2021 but payable in March 2022.

3. Original CD Investment was for 6 months (4.8% annual). Compound interest accrues monthly. At maturity, it was renewed for 6 additional months (3.6% annual). At end of year, transfer to cash.

4. Insurance was prepaid on 12/31/20 for 1 years coverage.

5. Inventory ending count is correct at $1,200,000.

6. Building completed on 12/31/20 and is to be depreciated Sum of the Years Digit method over 20 years, with estimated salvage set at $200,000.

7. Equipment installed on 12/31/20 and is to be depreciated Straight-Line method over 20 years with $200,000 estimated salvage.

7. Land improvements consisted of paving of parking lot, installing curbs and lighting. Costs are to be amortized over 20 years.

8. Patent has a 10-year remaining life.

9. Furniture, paid in cash, $200,000, arrived 7/1/21; depreciate Straight line method over 10 years.

10. Long-term note was set at 10 years, 6% annual interest, interest accruing monthly. We set monthly payments at $20,000 for 2021, payable every last day of the month.

11. Mortgage was set at 20 years, 6% annual interest; interest accruing monthly. We set monthly payment at $25,000 for year 2021, payable every last day of the month.

12. 1/1/21 Paid off account to Brown in full.

13. 1/1/21 Record the issuance of our $3,000,000, 5-year, 8% bond to yield 10% on Jan 1, 2021. Interest is paid annually every 12/31.

14. Paid property taxes for the year, $10,000.

15. 1/1/21 Entered into a 4-year equipment lease with COBA Inc. Lease calls for 4 payments of $503,201.34, first payment due at signing. COBA seeks an 8% return; asset cost $1,800,000. COBA covers all maintenance. Our insurance and property taxes include this leased asset. PV of annuity due at 8% for 4 years is 3.577097.

16. We acquired $3,200,000 of inventory throughout the year and assume it was all paid in cash. Record this entry prior to the revenue and COGS entries. Service Revenue for 2021 is $8,000,000 (80% cash; 20% receivable). COGS was $3,200,000 and General Operating Expenses were $300,000 (60% cash; 40% general accounts payable). Use December 31 as the date to record these transactions.

17. We declared and paid dividends of $60,000 on 12/31/21. Determine the appropriate sharing between preferred and common.

18. Make all the necessary adjusting and closing entries.