Need Help Solving 3.-5.... cant seem to understand the concept when I get to number 3.

Though I am not sure if my work is correct.

Wading Case study: Janet Rowe Janet Rowe graduated from high school five years ago with a background in agronomy. Janet had worked for a lawn care company until a year ago, when she decided to start her own business selling soil-testing kits to homeowners. Janet saved $20,000 during the past five years. She decided to invest the $20,000 in a proprietorship to sell the soil testing kits in the local community. Janet spent $2,000 for gas and other supplies. Janet calculated she needed at least $3,000 to make ends meet before she received the first check. Janet also spent $20,000 to purchase kits that would be placed in inventory. Janet's sister agreed to keep the books. Janet's father let her use the family garage for an office and agreed not to charge rent the first year. Janet purchased the following items to start the business. She purchased a service truck that cost $45,000, which she estimates will last another 5 years. Second, she purchased her own storage tank for gasoline to be used for the truck, and that cost $1,000. Third, she purchased a computer and some other office equipment for a total of $4,000. Janet's father is willing to lend her $15,000. The principal is to be repaid in 18 months. The interest rate is 4 percent per year. At the end of 12 months Janet will repay her father the interest for 12 months, but no principal. At the end of 18 months Janet will pay her father interest for 6 months, plus principal owed on the loan. Janet borrowed the balance of what she needed from First National Bank. The loan will be repaid in five equal, annual principal payments, with interest charged at an annual rate of 5 percent. At the end of the first year Janet's expenses were as follows: gas, oil, repairs and tires $10,000; telephone $600. During her first year she purchased 1,000 kits at $50.00/kit that were in addition to the $20,000 spent on kits to start the business. The freight on the kits was $5,000. At the end of the first year of the business she had $20,000 in inventory, Her gross sales from the business were $100,000. Kits sold that had been returned for a refund had been sold for $100.00. She had been making $50,000 per year when working at her previous job, and she calculated that she should make at least that much to justify the time spent in the business. Her sister spent about one day a week doing the office work, and Janet felt that she should be reimbursed at a rate of at least $50 a day for her efforts. Her sister worked 50 weeks and went on vacation for two weeks. Case questions 2 A E E 3 4 5 6 & 7 8 9 0 A. Case questions 1. Prepare a balance sheet as of the first day of business for Janet. The balance sheet is to be prepared after she purchased the assets needed to start the business and borrowed the money from her father and the bank. The date for the balance sheet is 12/31/2014. 1 Balance Sheet Janet Rowe Soil Testing Kits As of December 31, 2014 ASSETS LIABILITIES FC U A # 3 $ 4 5 6 & 7 00 9 0 E R TY rences Mallings Review View Tell me ALDE ADE BLODCEDOAaBbc Balance Sheet Janet Rowe Soil Testing Kits As of December 31, 2014 ASSETS LIABILITIES Current assets: Current liabilities: Cash $3,000 $8.000 Current bank loan $ Inventory Supplies $2.000 $8,000 Total current assets $25,000 Total current liabilities Long-Term Liabilities: Loan from father $ Fixed assets: Loan from bank $32,000 Total Long-term Liabilities Truck $ s $ TOTAL LIABILITIES Storage tank Computer S Total fixed assets OWNER'S EQUITY Other assets: TOTAL LIABILITIES AND TOTAL ASSETS OWNER'S EQUITY O FM B / U A E 2 $ 4 3 5 6 & 7 8 9 0 2 2. Prepare an income statement for Janet's first year of business. Make the following assumptions: Depreciate all fixed assets over five years and assume a salvage value of so. Janet makes her payment to the bank. She also pays her father interest only on the loan from him. She makes both payments on 12/30/2015. . Income Statement Janet Rowe Soil Testing Kits For the Period 1/1/2015-12/31/2015 Gross Sales Returns and Refunds 100 Net Sales Cost of Goods Sold For B & 3 4 % 5 6 7 8 9 0 3 21 . le Adre ARC AaBb C A Aa Bbc Bbc Heading Ping? Heading Nacing Heading Sube 1 Income Statement Janet Rowe Soil Testing Kits For the Period 1/1/2015-12/31/2015 Gross Sales S Returns and Refunds 100 Net Sales $ Cost of Goods Sold $20,000 Beginning Inventory Product Purchases 50,000 5,000 20.000 S 10,000 S Freight Ending Inventory Cost of Goods sold Gross Margin Operating Expenses Gas, Oil, Repairs, and Tires Salaries (Julie's sister) Telephone Depreciation Total operating expenses Net operating income Loan interest Interest paid to father Net profit income before taxes 600 10,000 2,000 Focus B & EEE 23 11 Abedite ACE Albedite Headings ABCD CD AaBb C No 3. Prepare a statement of owner's equity for Janet's first year of business. Janet lives with her parents so that reduces her need for living expenses. So she decided to withdraw $30,200 for family living expenses, because she is living at home with her parents. Statement of Owner's Equity for Janet Rowe Soil Testing Kits For the Period 1/1/2015-12/31/2015 20,000 Owner's equity, December 31, 2014 Net Profit after taxes, 2015 $ - Withdrawals Increase/Decrease in retained carnings Owner's equity, December 31, 2015 s 4. Prepare a balance sheet for the end of the first year for Janet's business. Use the information provided on Janet Row heainning balance sheet and income statement to complete an ending Focus B $ 3 4 5 6 7 8 Case Study Jane Rowe Table Design Layout Tell me ces Mallings Review View AD 21 ADA be Aa Bbce C. AaBbc ge 4. Prepare a balance sheet for the end of the first year for Janet's business. Use the information provided on Janet Rowe's beginning balance sheet and income statement to complete an ending balance sheet for Janet Rowe. The ending balance sheet date is 12/31/2015. Note: You will have to calculate Janet's cash balance on 12/31/2015, because it is not $3,000. Make the following assumptions: The ending inventory is the same amount as her beginning inventory, 520,000. The ending inventory for Janet's supplies is the same as the beginning balance sheet, $2,000. Janet was running a little low on cash at the end of 2015, so she charged $6,000 on the company credit card. Note: to find the amount of cash in the balance sheet, create a Statement of Cash Flows. 4 O Focus B $ 4 3 5 7 AaBbccdcDE CHO AaBb hacker ANDE Heading 3 TI Sube AE Balance Sheet Janet Rowe Soil Testing Kits As of December 31, 2015 ASSETS LIABILITIES Current assets: Current Liabilities: Cash $ Credit Card $6,000 Inventory 8,000 Supplies 2.000 Loan from bank Loan from father Total Current Liabilities 15,000 Total current assets $ Long-term assets Long-term liabilities Loan from bank Truck 45,000 24,000 Total long-term liabilities Storage tank 1,000 Computer 4,000 Depreciation (10,000) Total long-term assets s Total liabilities Other assets OWNER'S EQUITY Total owner's equity Total assets Total Liabilities/Owner's Equity Focus Headings 5. Prepare a statement of cash flows for Janet's first year of business. Statement of Cash Flows Janet Rowe Soil Testing Kits For the Period 1/1/2015-12/31/2015 Cash flow from operating expenses Net profit after taxes $ 19,200 + Depreciation 10,000 - Withdrawal for salary (30,200) Net cash from operating expenses Cash flow from investing (disinvesting) Cash flow from financing activities Cash from credit card $6,000 - Principal payment to bank Net cash from financing I Net change in cash Beginning cash balance 3,000 Ending cash balance Focus B $ 5 2 AtbCode ABCDE Heading 3 AutoCedte AaBbc BbCCOLE Code AaBb AB No Spacing Heading! Heading 2 Heading 4 Title Normal Balance Sheet Janet Rowe Soil Testing Kits As of December 31, 2014 LIABILITIES ASSETS Current assets: Current liabilities: Cash Current bank loan $8,000 Inventory Supplies Total current assets $3,000 $20,000 $2,000 $25,000 $8,000 Total current liabilities Long-Term Liabilities: Loan from father $15.000 Fixed assets: Loan from bank $32,000 Truck Total Long-term Liabilities TOTAL LIABILITIES $47.000 $55,000 Storage tank Computer $45,000 $1.000 $4.000 $50,000 Total fixed assets OWNER'S EQUITY $20,000 Other assets: 0 TOTAL LIABILITIES AND TOTAL ASSETS $75,000 OWNER'S EQUITY $75,000 15 tv AaRC.DE Accode AaBbceste AaBCD ABCDE sto cedre AaBb Heading Heading 2 Heading 4 Title 2 Heading 3 Normal No Spacing Income Statement Janet Rowe Soil Testing Kits For the Period 1/1/2015-12/31/2015 Gross Sales $100,000 Returns and Refunds 100 Net Sales $ 99,900 Cost of Goods Sold $20,000 50,000 5.000 20.000 $55,000 $44.900 Beginning Inventory Product Purchases Freight Ending Inventory Cost of Goods sold Gross Margin Operating Expenses Gas, Oil, Repairs, and Tires Salaries (Julie's sister) Telephone Depreciation Total operating expenses Net operating income Loan interest Interest paid to father 10,000 $2.500 600 10,000 $23.100 $21.800 2,000 $50 Net profit income before taxes $19.750 0 P 15 30) tv A . Wading Case study: Janet Rowe Janet Rowe graduated from high school five years ago with a background in agronomy. Janet had worked for a lawn care company until a year ago, when she decided to start her own business selling soil-testing kits to homeowners. Janet saved $20,000 during the past five years. She decided to invest the $20,000 in a proprietorship to sell the soil testing kits in the local community. Janet spent $2,000 for gas and other supplies. Janet calculated she needed at least $3,000 to make ends meet before she received the first check. Janet also spent $20,000 to purchase kits that would be placed in inventory. Janet's sister agreed to keep the books. Janet's father let her use the family garage for an office and agreed not to charge rent the first year. Janet purchased the following items to start the business. She purchased a service truck that cost $45,000, which she estimates will last another 5 years. Second, she purchased her own storage tank for gasoline to be used for the truck, and that cost $1,000. Third, she purchased a computer and some other office equipment for a total of $4,000. Janet's father is willing to lend her $15,000. The principal is to be repaid in 18 months. The interest rate is 4 percent per year. At the end of 12 months Janet will repay her father the interest for 12 months, but no principal. At the end of 18 months Janet will pay her father interest for 6 months, plus principal owed on the loan. Janet borrowed the balance of what she needed from First National Bank. The loan will be repaid in five equal, annual principal payments, with interest charged at an annual rate of 5 percent. At the end of the first year Janet's expenses were as follows: gas, oil, repairs and tires $10,000; telephone $600. During her first year she purchased 1,000 kits at $50.00/kit that were in addition to the $20,000 spent on kits to start the business. The freight on the kits was $5,000. At the end of the first year of the business she had $20,000 in inventory, Her gross sales from the business were $100,000. Kits sold that had been returned for a refund had been sold for $100.00. She had been making $50,000 per year when working at her previous job, and she calculated that she should make at least that much to justify the time spent in the business. Her sister spent about one day a week doing the office work, and Janet felt that she should be reimbursed at a rate of at least $50 a day for her efforts. Her sister worked 50 weeks and went on vacation for two weeks. Case questions 2 A E E 3 4 5 6 & 7 8 9 0 A. Case questions 1. Prepare a balance sheet as of the first day of business for Janet. The balance sheet is to be prepared after she purchased the assets needed to start the business and borrowed the money from her father and the bank. The date for the balance sheet is 12/31/2014. 1 Balance Sheet Janet Rowe Soil Testing Kits As of December 31, 2014 ASSETS LIABILITIES FC U A # 3 $ 4 5 6 & 7 00 9 0 E R TY rences Mallings Review View Tell me ALDE ADE BLODCEDOAaBbc Balance Sheet Janet Rowe Soil Testing Kits As of December 31, 2014 ASSETS LIABILITIES Current assets: Current liabilities: Cash $3,000 $8.000 Current bank loan $ Inventory Supplies $2.000 $8,000 Total current assets $25,000 Total current liabilities Long-Term Liabilities: Loan from father $ Fixed assets: Loan from bank $32,000 Total Long-term Liabilities Truck $ s $ TOTAL LIABILITIES Storage tank Computer S Total fixed assets OWNER'S EQUITY Other assets: TOTAL LIABILITIES AND TOTAL ASSETS OWNER'S EQUITY O FM B / U A E 2 $ 4 3 5 6 & 7 8 9 0 2 2. Prepare an income statement for Janet's first year of business. Make the following assumptions: Depreciate all fixed assets over five years and assume a salvage value of so. Janet makes her payment to the bank. She also pays her father interest only on the loan from him. She makes both payments on 12/30/2015. . Income Statement Janet Rowe Soil Testing Kits For the Period 1/1/2015-12/31/2015 Gross Sales Returns and Refunds 100 Net Sales Cost of Goods Sold For B & 3 4 % 5 6 7 8 9 0 3 21 . le Adre ARC AaBb C A Aa Bbc Bbc Heading Ping? Heading Nacing Heading Sube 1 Income Statement Janet Rowe Soil Testing Kits For the Period 1/1/2015-12/31/2015 Gross Sales S Returns and Refunds 100 Net Sales $ Cost of Goods Sold $20,000 Beginning Inventory Product Purchases 50,000 5,000 20.000 S 10,000 S Freight Ending Inventory Cost of Goods sold Gross Margin Operating Expenses Gas, Oil, Repairs, and Tires Salaries (Julie's sister) Telephone Depreciation Total operating expenses Net operating income Loan interest Interest paid to father Net profit income before taxes 600 10,000 2,000 Focus B & EEE 23 11 Abedite ACE Albedite Headings ABCD CD AaBb C No 3. Prepare a statement of owner's equity for Janet's first year of business. Janet lives with her parents so that reduces her need for living expenses. So she decided to withdraw $30,200 for family living expenses, because she is living at home with her parents. Statement of Owner's Equity for Janet Rowe Soil Testing Kits For the Period 1/1/2015-12/31/2015 20,000 Owner's equity, December 31, 2014 Net Profit after taxes, 2015 $ - Withdrawals Increase/Decrease in retained carnings Owner's equity, December 31, 2015 s 4. Prepare a balance sheet for the end of the first year for Janet's business. Use the information provided on Janet Row heainning balance sheet and income statement to complete an ending Focus B $ 3 4 5 6 7 8 Case Study Jane Rowe Table Design Layout Tell me ces Mallings Review View AD 21 ADA be Aa Bbce C. AaBbc ge 4. Prepare a balance sheet for the end of the first year for Janet's business. Use the information provided on Janet Rowe's beginning balance sheet and income statement to complete an ending balance sheet for Janet Rowe. The ending balance sheet date is 12/31/2015. Note: You will have to calculate Janet's cash balance on 12/31/2015, because it is not $3,000. Make the following assumptions: The ending inventory is the same amount as her beginning inventory, 520,000. The ending inventory for Janet's supplies is the same as the beginning balance sheet, $2,000. Janet was running a little low on cash at the end of 2015, so she charged $6,000 on the company credit card. Note: to find the amount of cash in the balance sheet, create a Statement of Cash Flows. 4 O Focus B $ 4 3 5 7 AaBbccdcDE CHO AaBb hacker ANDE Heading 3 TI Sube AE Balance Sheet Janet Rowe Soil Testing Kits As of December 31, 2015 ASSETS LIABILITIES Current assets: Current Liabilities: Cash $ Credit Card $6,000 Inventory 8,000 Supplies 2.000 Loan from bank Loan from father Total Current Liabilities 15,000 Total current assets $ Long-term assets Long-term liabilities Loan from bank Truck 45,000 24,000 Total long-term liabilities Storage tank 1,000 Computer 4,000 Depreciation (10,000) Total long-term assets s Total liabilities Other assets OWNER'S EQUITY Total owner's equity Total assets Total Liabilities/Owner's Equity Focus Headings 5. Prepare a statement of cash flows for Janet's first year of business. Statement of Cash Flows Janet Rowe Soil Testing Kits For the Period 1/1/2015-12/31/2015 Cash flow from operating expenses Net profit after taxes $ 19,200 + Depreciation 10,000 - Withdrawal for salary (30,200) Net cash from operating expenses Cash flow from investing (disinvesting) Cash flow from financing activities Cash from credit card $6,000 - Principal payment to bank Net cash from financing I Net change in cash Beginning cash balance 3,000 Ending cash balance Focus B $ 5 2 AtbCode ABCDE Heading 3 AutoCedte AaBbc BbCCOLE Code AaBb AB No Spacing Heading! Heading 2 Heading 4 Title Normal Balance Sheet Janet Rowe Soil Testing Kits As of December 31, 2014 LIABILITIES ASSETS Current assets: Current liabilities: Cash Current bank loan $8,000 Inventory Supplies Total current assets $3,000 $20,000 $2,000 $25,000 $8,000 Total current liabilities Long-Term Liabilities: Loan from father $15.000 Fixed assets: Loan from bank $32,000 Truck Total Long-term Liabilities TOTAL LIABILITIES $47.000 $55,000 Storage tank Computer $45,000 $1.000 $4.000 $50,000 Total fixed assets OWNER'S EQUITY $20,000 Other assets: 0 TOTAL LIABILITIES AND TOTAL ASSETS $75,000 OWNER'S EQUITY $75,000 15 tv AaRC.DE Accode AaBbceste AaBCD ABCDE sto cedre AaBb Heading Heading 2 Heading 4 Title 2 Heading 3 Normal No Spacing Income Statement Janet Rowe Soil Testing Kits For the Period 1/1/2015-12/31/2015 Gross Sales $100,000 Returns and Refunds 100 Net Sales $ 99,900 Cost of Goods Sold $20,000 50,000 5.000 20.000 $55,000 $44.900 Beginning Inventory Product Purchases Freight Ending Inventory Cost of Goods sold Gross Margin Operating Expenses Gas, Oil, Repairs, and Tires Salaries (Julie's sister) Telephone Depreciation Total operating expenses Net operating income Loan interest Interest paid to father 10,000 $2.500 600 10,000 $23.100 $21.800 2,000 $50 Net profit income before taxes $19.750 0 P 15 30) tv A