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Bizrate Electronics, Inc.

A "C" Corporation

For the Year Ended December 31, 2018

Bizrate Electronics was organized on February 22, 2018, by Jon Jones and Billy Burt.Jon contributed $270,000 cash and SBUX stock (acquired 01/01/2017) worth $30,000 for 60% of Bizrate stock, while Billy contributed $200,000 cash for 40% of the stock.Jon's social security number is 123-45-6789 and Billy's is 987-65-4321. Bizrate's employer ID number is 12-3456789.Bizrate began business on March 1, 2018.Bizrate is a retail electronics outlet located at 118812 Josey Lane, Louisville, KY 40018.Bizrate uses the accrual method of accounting, the first-in, first-out (FIFO) inventory method, and a calendar year.

Bizrate's 2018 income statement, balance sheet, and statement of changes in retained earnings are on the following pages..

Bizrate Electronics, Inc.

Income Statement

For the Year Ended December 31, 2018

Sales

4,700,000

Returns and Allowances

(50,000)

4,650,000

Beginning Inventory

0

Purchases

4,050,000

4,050,000

Ending Inventory

(1,700,000)

(2,350,000)

Gross Profit

2,300,000

Expenses

Salaries (a)

980,000

Depreciation (b)

75,400

Advertising

30,000

Bad Debts

39,000

Rent

100,000

Interest (c)

39,500

Utilities

38,300

Delivery Expense

34,900

Office Supplies

46,200

Repairs and Maintenance

29,000

Organization Expense (d)

6,000

Meals and Entertainment

80,000

Insurance Expense (e)

36,000

Payroll Taxes

113,300

2018 Federal Income Tax Deposits

250,000

Other Taxes

20,000

Fines and Penalties (Traffic)

1,000

Accounting and Legal

12,000

Charitable Contributions - Red Cross

18,000

Real Estate Taxes on Investment Land

800

1,949,400

350,600

Other Income

Gain on Sale of Stock (f)

4,000

Sale of Delivery Truck (g)

8,600

Interest on County Tax Exempt Bonds

1,100

Interest on CDs

11,500

Dividends from US Corporations (h)

5,600

30,800

Net Income

381,400

Bizrate Electronics, Inc.

Notes to Income Statement

a.Includes salaries: Jon Jones $200,000, Billy Burt $50,000.

b.Depreciation for tax purposes $112,700.

c.$2,500 is allocable to the investments in stock.The remainder is related to Bizrate's business.

d.$6,000 in fees were incurred in organizing Bizrate.

e.Includes $5,000 of premiums for term life insurance on Jon and Billy.Bizrate is the beneficiary of these policies.In addition, $4,300 of the health insurance premiums are attributable to coverage for Jon and his family, and $3,900 are attributable to coverage for Billy and his family.

f.Sold 500 shares of SBUX stock for $35,000 on December 1, 2018.The stock had been purchased by Jon on July 1, 2004 for $20,000 and was contributed by him on February 22, 2018, when it was worth $30,000.Also, on December 1, 2018 sold 100 shares of Grand View, Inc. for $2,000.The stock had been purchased on March 1, 2018 for $3,000.At no time did Bizrate own more than 1% of the outstanding stock of these corporations.

g.Sold a delivery truck on September 23, 2018 for $35,000.The Truck had originally been purchased on May 1, 2018 for $33,400.Depreciation taken for book purposes was $7,000.Depreciation taken for tax purposes was $9,350.

h.Bizrate owns less than 20% of the outstanding stock of each of these corporations.

Bizrate Electronics, Inc.

Balance Sheet

December 31, 2018

Assets

Cash

113,000

Accounts Receivable

300,000

Less Allowance for Bad Debts

29,000

271,000

Inventory

1,700,000

Tax Exempt Securities

17,000

Other Current Assets

40,000

Other Investments

85,000

Buildings and Depreciable Assets (net)

165,400

Land

70,000

Total Assets

2,461,400

Liabilities and Equity

Accounts Payable

375,000

Mortgages, Notes Payable in < 1 year

185,000

Other Current Liabilities

70,000

Mortgages, Notes Payable in > 1 year

1,190,000

Capital Stock

500,000

Retained Earnings

141,400

Total Liabilities and Equity

2,461,400

Bizrate Electronics, Inc.

Statement of Changes in Retained Earnings

For the Year Ended December 31, 2018

Beginning Balance

0

Income

381,400

Distributions

(240,000)

Balance, December 31, 2018

141,400

Other Information

Addresses for the owners are:

Jon Jones, 3513 Jackson Street, Louisville, KY 40018

Billy Burt, 2532 Sugarbush, Louisville, KY 40018