Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Penny Cassidy is considering forming her own pool service and supply company, Pennys Pool Service & Supply Inc. (PPSS). She has decided to incorporate the

Penny Cassidy is considering forming her own pool service and supply company, Pennys Pool Service & Supply Inc. (PPSS). She has decided to incorporate the business to limit her legal liability. She expects to invest $40,000 of her own savings and receive 1,000 shares of capital. Her plan for the first year of operations forecasts the following amounts at December 31, 2019, the end of the year: Cash in bank, $2,900; amounts due from customers for services rendered, $2,300; pool supplies inventory, $4,600; equipment, $48,000; amounts owed to Pool Corporation Inc., a pool supply wholesaler, $3,500; note payable to the bank, $5,000. Penny forecasts first year sales of $60,000, wages of $24,000, cost of supplies used $8,200, other administrative expenses $4,500, and income tax expense of $4,000. She expects to pay herself a $10,000 dividend as the sole shareholder of the company.

image text in transcribed

2. Prepare a statement of shareholders' equity as at December 31, 2019. PENNY'S POOL SERVICE & SUPPLY INC. Statement of Shareholders' Equity For the Year Ended December 31, 2019 Contributed Retained Capital Earnings Balance, January 1, 2019 Issuance of shares Net earnings for 2019 Dividends for 2019 Balance, December 31, 2019 $ 0 $ 0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Governmental Accounting

Authors: Steven M. Bragg

2022nd Edition

1642210781, 978-1642210781

More Books

Students also viewed these Accounting questions

Question

3 > O Actual direct-labour hours Standard direct-labour hours...

Answered: 1 week ago

Question

Be able to differentiate between arbitration and mediation

Answered: 1 week ago

Question

Understand how arbitrators are credentialed and selected

Answered: 1 week ago

Question

Appreciate the advantages of arbitration

Answered: 1 week ago