Subject 1 (25%) . ABC was founded on January 1, 2020, when the firm issued shares of common stock to various investors. During 2020 received a bank loan. Assume the following information concerning ABC for the year ending December 31, 2020

: a. Cash receipt:

From customers 180,000

From issuance of common stocks 50,000

From bank loan 50,000

b. Cash disbursements:

Inventory purchase 150,000

Salaries 15,000

Rent 7,500

Utilities 2,500

Purchase of equipment 20,000

Insurance 1,500

a. The bank loan was received on 1 April, 2020. The agreement requires payment of interest and principal on 1 April 1, 2021. The annual interest rate is 8%.

b. Inventories on hand at the end of the year cost 50,000.

c. The equipment was purchased on 1 April 1, 2020. The estimated useful life was 8years while the anticipated salvage value was minimal.

d. Rent on building is 500 per month. On November 1, 2020, five months rent was paid in advance.

e. ABCs share capital amounts to 50,000.

f. Income tax rate is 8%. A fiscal periods tax is payable during the next fiscal period.

g. On December 31, 2020 the following amounts were owned: To suppliers of inventory 10,000 To the utility company 500

Required: Prepare a balance sheet on December 31, 2020 (15%