Record journal entries for the transactions and post to the general ledger. Prepare a worksheet with a trial balance and Income Statement and a Balance Sheet for the year ended 12/31/19. Assume a corporate tax rate of 20%.

Bill’s Bakery

In June of 2019, Bill Baker bought a piece of land with an old building on it to build and open a bagel shop and cafe. Bill knocked down the old building and built a bakery with a café and a small warehouse. He also put in a parking lot.

The cost of the land was $80,000. He paid $3000 in delinquent real estate taxes and $7000 in attorney’s fees at the closing. The cost to knock down the old building and clear the land was $16,000, but he was able to sell the scrap bricks and lumber for $6,000. The cost to construct the new building was $160,000 and he paid $10,000 to have the parking lot paved and have lights and a fence put up. After the building was completed Bill had an alarm system installed for $2000. Bill purchased furniture and fixtures for $4,000 and was able to buy an oven, refrigerator-freezer and dishwasher for special bundle price of $34,000. The actual fair market values and life and salvage value are listed below:

Estimated Life

Estimated Life

	FMV	SalvValue	Years	Hrs.	Actual Use 2019	Actual Use 2020
Oven	$14,000	$2,000	8	6,000	300	1,000
Refrigerator-Freezer	$20,000	$4,000	10	8,000	1,200	2,400
Dishwasher	$6,000	$1,000	6	2,000	400	800

Bill financed the business and the purchase of the land, construction of the building and equipment by taking out a 15 year mortgage for $260,000 at a rate of 6% and investing $40,000 of his own money.

Other 2019 Events

6/15/2019 Purchased of $100,000 of baking supplies and other inventory on account

6/30/2019 Hired 3 employees

7/31/2019 Delivered bagels to area businesses and billed them $60,000 and recorded $80,000 in cash sales. 8/15/2019 Insurance of $3,600, utilities of $8,000 and $4000 for advertising and promotion, and $2400 in legal and professional fees during the year.

8/31/2019 Paid $80,000 in payroll expenses 9/15/2019 Received payments of $40,000 cash on account from customers

9/30/2019 Made payments of $80,000 on account to vendors for purchases.

11/1/2019 Delivered bagels to area business and billed them $50,000 and received $60,000 in cash sales. 12/31/2019 Recorded depreciation expense on the building and new equipment (use the straight line method) 12/31/2019 Counted $30,000 of supplies remaining at year end

12/31/2019 After a successful first year of business, paid himself a dividend of $4000