P3-10 Balance sheet preparation LO3-2, LO3-3 Melody Lane Music Company was started by John Ross early in 2024. Initial capital was acquired by issuing shares of common stock to various investors and 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 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 year ending December 31. 2024: a. Cash receipts consisted of the following: From customers From issue of common stock From bank loan $360,000 100,000 100,000 b. Cash disbursements were as follows: Purchase of inventory $300,000 Rent 15,000 Salaries 30,000 Utilities 5,000 Insurance 3,000 Purchase of equipment 40,000 c. 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%. d. The equipment was purchased on January 3, 2024, and has an estimated useful life of 10 years with no anticipated salvage value. Depreciation per year is $4,000. e. Inventory on hand at the end of the year cost $100,000. f. Amounts owed at December 31, 2024, were as follows: To suppliers of inventory To the utility company $20,000 1,000 g. Rent on the store building is $1,000 per month. On December 1, 2024, four months' rent was paid in advance. h. Net income for the year was $76,000. Assume that the company is not subject to federal, state, or local income tax. i. One hundred thousand shares of no par common stock are authorized, of which 20,000 shares were issued and are outstanding. Required: Prepare a balance sheet at December 31, 2024. Include headings for each classification, as well as titles for each classification's subtotal. An example of a classified balance sheet can be found in the Concept Review Exercise at the end of Part A of this chapter.