NAME:

Melody Lane Music Co$.$ was started by John Ross early in $2024.$ Initial capital was acquired by issuing shares

of common stock to various investors and ol taining a bank loan. The company operates a retail store that sells

records, tapes and compact discs. Business $\text{'}$ vas so good during the first year of operations that John is

considering opening a second story on the oti er 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.

John asks for your help in preparing the balance sheet and presents you with the following information for the

period ending December $31,2024$

Cash Receipts:

From Customers $$360,000$

From issue of Common Stock $$100,000$

From Bank Loan $$100,000$

Cash Disbursements:

For Inventory Purchased $$300,000$

Advertising $$15,000$

Salaries $$30,000$

Utilities $$5,000$

Rent $$4,000$

Purchase of Equipment $$40,000$

The bank loan was made on March $31,2024.$ A note was signed requiring payment of interest and

principal on March $31,2025.$ The interest rate is $12\%,$ per year.

The equipment was purchased on January $1,2024$ and has an estimated useful life of $10$ years with no

anticipated salvage value. Depreciation is calculated on a straight$-$line basis.

Inventory is purchased on a vendor account. The inventory on hand at the end of the year cost $$100,000$

Salaries and Advertising are paid immediately, as required

Amount owed at December $2024,$ were as follows:

To suppliers of inventory $$20,000$

To the utility company $$1,000$

Rent on the store building is $$1,000$ per month. On December $1,2024,$ the four months' rent was paid in

advance

Customer's accounts are fully paid by $\frac{12}{31}\frac{?}{2024}$

One hundred thousand shares of $$1$ par value common stock are authorized, of which $20,000$ shares

were issued and are outstanding

Prepare a classified balance sheet for December $31,2024.$ IN PROPER FORM $($includes heading for each

classification, as well as titles for each classification's subtotal.$)$ Also prepare an income statement for the

first year of operations ending Dec. $31,2024.$