Problem 3-10 Balance sheet preparation [LO3-2, 3-3] Melody Lane Music Company was started by John Ross early in 2018. Initial capital was acquired by issuing shares of common stock to various investors and by 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 John asks for your help in preparing the balance sheet and presents you with the following information for the year ending December 31, 2018: a. Cash receipts consisted of the following: custoners 410,75 From iasue of comnon atock 110,000 b. Cash disbursements were as follows Purchase of inventory $305,000 45,000 10,000 45,000 tilities Purchase of equipnent and furniture C. The bank loan was made on March 31, 2018. A note was signed requiring payment of interest and principal on March 31, 2019. The interest rate is 10%. d. The equipment and furniture were purchased on January 3, 2018, and have an estimated useful life of 10 years with no anticipated salvage value. Depreciation per year is $4,500. e. Inventories on hand at the end of the year cost $105,000. f. Amounts owed at December 31, 2018, were as follows: To auppltera of inventory To the utility conpany $ 25,000 3,000 g. Rent on the store building is $3,000 per month. On December 1, 2018, four months' rent was paid in advance. h. Net income for the year was $81,000. 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 25,000 shares were issued and are outstanding. Required: Prepare a balance sheet at December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.) MELODY LANE MUSIC COMPANY Balance Sheet At December 31, 2018