GOLDEN STATE INC.

Statement of Financial Position

September 30, 2017

Assets Liabilities

Cash $860,000 Notes Payable 12% $260,000

Accounts Receivable $10,000 Income Taxes Payable $8,000

Marketable Securities $6,000 Total $268,000

Inventory $9,000 Common Stock $8 par $640,000

Land $50,000 Excess of par $14,000

Equipment $60,000 Retained earnings $53,000

Acc. Depr. ($20,000) $40,000 Total $707,000

Total Assets $975,000 Total Liabilities & Equity $975,000

Pprepare in good financial form, a set of financial statements for GOLDEN STATE INC. for the quarter ending 12/31/2017.

1. Oct. 1 Purchased a building for $800,000. The fair market value of the building at the time of acquisition was $950,000. Only $100,000 in cash was paid at the time of legal title transfer and the corporate controller signed a note for the balance. The interest rate on the loan is 8%. This loan requires monthly payments of $10,000. Useful life for the building is 40 years.

2. Oct. 2 Equipment purchased on this date for $500,000. Golden decided to adopt a useful life of 10 years for this particular machine and elected to sign a 10% interest bearing note for $400,000 and paid cash for the balance. Payment on the note will be yearly and the first payment is due October 2, 2018.

3. Oct 3. - Entered into a fire and casualty liability insurance contract. This was a three-year contract and the amount paid was $18,000 for the full coverage period. The effective date of the coverage is October 1, 2017.

4. Oct. 10 Purchased $80,000 of merchandise. Golden paid $5,000 at the time of this purchase and the rest was to be paid in 30 days.

5. Oct. 15 Golden State Inc. issued 400,000 shares of common stock for $15 per share. All cash was received from the investment banker on this date.

6. Oct. 20 - Purchased $60,000 of inventory and cash was paid in full at the time of acquisition.

7. Oct. 27 Sales to a customer amounted to $400,000. Received $100,000 in cash on this date.

8. Nov. 1 - $10,000 monthly note payment in cash was paid for the note entered into on October 1, 2017.

9. Nov. 10 Utilities expenses paid. The amount was $12,000.

10. Nov. 15 Wage paid in the amount of $16,000.

11. Nov. 20 Customers returned $22,000 worth of merchandise that was sold to them on Oct. 27, 2017. Golden agreed to credit the customers account for the full amount and placed the items back onto the store shelves.

12. Nov. 26 $10,000 monthly note payment in cash was paid for the note entered into on October 1, 2017.

13. Nov. 27 Received payment in full for the sales generated on Oct. 27, 2017.

14. Dec. 1 - Sales to Zal-Mart amounted to $600,000. No terms offered but Zal-Mart had 60 days to pay in full.

15. Dec. 1 Income tax paid for the amount accrued on September 30, 2017.

16. Dec. 15 Paid in full the amount owed for the Oct. 10 purchases.

17. Dec. 18 Dividends declared to shareholders to be paid on April 1, 2018. Dividend amount is $1.50 per share.

18. Dec. 30 Equipment listed on the balance sheet as of September 30, 2017 was sold for $30,000. Cash received in that amount. The useful life of this equipment was 5 years.

19. Dec. 31 Wages paid in cash this date was $5,000.

20. Dec. 31 Ending Inventory at year end was $30,000.

Assume the tax rate is 15% for Golden State Inc.