Fun Times Music Company was started by Julia All early in 2021. Initial capital was acquired by issuing shares of common stock to various investors and by obtaining a bank loan. The company operates a retail store that sells records, tapes and compact discs. Business is expanding and the company needs a loan. In order to approve the loan, the bank requires financial statements.

Please prepare a balance sheet and income statement for the year ended December 31, 2021.

1. Cash receipts consisted of the following for the year:
   1. From customers $450,000
   2. From issuance of stock $100,000
   3. From the bank loan of $100,000
2. Cash disbursements for the year:
   1. Purchase of Inventory $300,000
   2. Rent $15,000
   3. Salaries $35,000
   4. Utilities $5,000
   5. Insurance $3,000
   6. Purchase of equipment $40,000
3. The bank loan was made on March 31, 2021. A note was signed requiring payment of interest and principal on March 31, 2022. The interest rate is 12%
4. The equipment was purchased on Jan 1^st 2021. It has a 10 year estimated useful life.
5. Inventory on hand at year end was $100,000.
6. Amounts owed at Dec 31, 2021 were the following:
   1. To suppliers for inventory $20,000
   2. To the utility company $1,000
7. Rent on the building was $1,000 per month. On Dec 31, 2021, four months of rent was paid in advance for Dec March.
8. Calculate Net income. Assume no income taxes.
9. One hundred thousand shares of no par common stock are authorized of which 20,000 shares were issue and are outstanding.
10. Customers owe the company $10,000 for product sold.
11. The company estimates that $500 is needed for uncollectible accounts for the year.