Melody Lane Music Company was started by John Ross early in 2021. Initial capital was acquired by fssuing 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 was so good during the first year of operations that John is considering opening a second store on the other side of town. The funds necessary for expansion wili come from a new bank loan. In order to approve the loan, the bank requires financial statements. John askis for your help in preparing the balance sheet and presents you with the following information for the year ending December 31, 2021: a. Cash receipts consisted of the foliowing: b. Cash disbursements were as follows: C. The bank loan was made on March 31, 2021. A note was signed requiring payment of interest and principal on March 3i, 2022 . The interest rate is 10%. d. The equipment was purchased on January 3, 2021, and has an estimated useful life of 10 years with no anticipated salvage value. Depreciation per year is $5.200 e. Inventory on hand ot the end of the year cost $112.000. t. Amounts owed at December 31,2021 , were as follows: 9. Rent on the store builing 15$2,000 per month. On December 1,2021 , four months' rent was paid in advance. h. Net income for the year was $88,000. Assume that the company is not subject to federal, state, of local income tax 1. Two hundred thousand shares of no par common stock are authorized, of which 32,000 shares were issued and are outstandinn Business was 50 good during the first year of operations that John is considering opening a second store on the other side of town The funds necessary for expansion will come from a new bank loan. In order to approve the loan, the bank requires financial statements. Jolw asks for your heip in preparing the balance sheet and presents you with the following information for the year ending Decembe 31.2021: a. Casti recelpts consisted of the following: b. Cash disbursements were as follows: c. 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 10% d. The equipment was purchased on January 3. 2021, and has an estimated useful life of 10 years with no anticipated saivage value. Depreciation per year is $5,200. e. Inventory on hand at the end of the year cost $112.000 f. Amounts owed at December 31, 2021, were as follows: 9. Rent on the store bullding is $2.000 per month. On December 1, 2021, four months' rent was paid in advance h. Net income for the year was $88,000. Assume that the company is not subject to federal, state. or local income tax : 1. Two hundred thousand shares of no par common stock are authorized, of which 32,000 shares were issued and are outstanding. Required: Prepare a baiance sheet at December 31, 2021. Include headings for each classincation, as well as titles for each classification's subtotal. (Amounts to be deducted should be Indlcated by a minus sign.)
