Mini Question 7

The following events occurred at Barber Shop during its first year of busin ess:

a.

To establish the company, the two owners contributed a total of $60,000 in exchange for common stock.

b.

Barb er shop Grooming service revenue for the first year amounted to $175,000, of which $50,000 was on account.

c.

Customers owe $15,000 at the end of t he year from the services provided on account.

e.

At the beginning of the year, the company purchased a patent at a cost of $120,000 for a revolutionary system to be used for dog grooming. The patent is expected to be useful for ten years. The company paid 20% down in cash and signed a four - year note at the bank for the remainder.

f.

Other o perating expenses totaled $ 6 3 ,000 for the first year. No expenses were accrued or unpaid at the end of the year.

g.

The company declared and paid a $25,000 cash dividend at the end of the first year.

You are asked to :

Prepare income statement first year of business.