Saratoga Inc.

Statement of Financial Position

December 31, 2020

Assets Liabilities

Cash $259,000 Notes Payable 8% $60,000

Inventory $6,000 Accounts Payable $40,000

Prepaid Insurance $3,000 Total $100,000

Supplies $4,000 Common Stock $5 par $140,000

Land $6,000 Excess of par $60,000

Building $480,000 Retained earnings $418,000

Acc. Depr. ( $40,000) $440,000 Total $618,000

Total Assets $718,000 Total Liabilities & Equity $718,000

Prepare in good financial form, the income statement, the statement of retained earnings and the balance sheet or Saratoga Inc. for the quarter ending 3/31/2021.

1. Jan. 1 Purchased equipment for $70,000 and signed a note for the entire cost. The interest rate on this note is 6%. This loan requires monthly payments of $2,000. Monthly payments include interest and principle. Useful life is 5 years.

2. Jan. 1 Machine purchased on this date for $100,000. Useful life for this machine is 10 years. Saratoga elected to sign a note for the full amount of the purchase price. The note has a 10% rate of interest. Payment on the note will be yearly and the first payment is due December 31, 2021.

3. Jan. 10 Purchased $80,000 of inventory on account

4. Jan. 15 Issued 200,000 shares of common stock of Saratoga Inc. for $12 per share. All cash received on this date.

5. Jan. 27 Sales to a customer amounted to $190,000. Received $18,000 in cash on this date.

6. Jan. 31 The $2,000 monthly note payment in cash. This note created on January 1, 2021.

7. Feb. 10 Utilities expenses paid. The amount was $5,000.

8. Feb. 15 Salary and wage expense of $26,000 paid this date.

9. Feb. 28 The $2,000 monthly note payment made. This note entered into on Jan. 1, 2021.

10. Feb. 28 Received payment in full for the sale on Jan. 27, 2021.

11. Mar. 1 - Sales to a business company was for $450,000 and only $20,000 paid in cash.

12. Mar. 1 Acquire equipment for $240,000 paid $40,000 in cash and signed a 4% note for the balance. Equipment has a useful life of 5 years.

13. Mar. 15 Paid $9,000 for advertising.

14. Mar. 17 Customer returned $5,000 of the sales dated March 1, 2021.

15. Mar. 18 Dividends of $1 per share declared this date to shareholders as record owners on March 30, 2021.

16. Mar. 31 Salary and wages of $25,000 paid in cash.

17. Mar. 31 Warehouse employees determined that only $1,000 of supplies were available.

18. Mar.31 Ending Inventory at March 31, 2021 was $40,000.

19. Mar. 31 Utility expense for had to be accrued for $7,000.

20. Mar. 31 Assume the two-year insurance contract listed on the 12/31/2020 acquired December 31, 2020.

21. Building has a useful life of 20 years AND tax rate is 15%

Remember: You need the following

Statement of Revenue & Expenses {Income statement}

Statement of Retained Earnings

Statement of Financial Position {Balance Sheet}