The Bozo Construction Company (Bozo) was incorporated on April 1, 201x. Bozo had ten holders of common stock. Malachai Bozo who was the president and chief executive officer (CEO) owned 51% of the shares. The company rented space in a run down industrial space and specialized in building concrete sidewalks. Bozos first office was located on 3rd Street and Figueroa Street in Los Angeles. The office building was called Fig3 and contained 2,500 square feet of space of which 1,000 feet were for offices and 1,500 feet were for warehouse.

The following events happened in April:

1. The company was incorporated. Common stockholders invested $100,000 cash of which Malachai Bozo invested $51,000.

2. Bozo purchased materials including cement, aggregate, and expendable tools (i.e. inventory) for use in future construction projects for $40,000 cash.

3. Bozo purchased more inventory on open account for $25,000. Open account means that Bozo established credit (A/P) with its vendors and promised to pay the vendors for purchases within the terms of the agreement with the vendors.

4. Bozo was awarded a contract by Fig Development Company to build a sidewalk for $90,000.

5. Bozo completed the contract and billed Fig Development Company $90,000.

6. Bozo used $37,000 in inventory to perform the project.

7. The Client Fig Development Company paid $45,000 in cash to Bozo that was 50% of the amount owed to Bozo.

8. Bozo paid $20,000 cash towards the inventory it had purchased on open account in transaction #3.

9. Bozo purchased a new bobcat for $54,000. Its expected useful life was 36 months with no terminal scrap value. Straight line depreciation was adopted. Bozo paid $12,000 cash as a down payment and signed a promissory note through an equipment finance company for the balance of $42,000.

10. Bozo signed a rental agreement with Fig3. The agreement called for a flat $3,000 per month payable quarterly in advance. Therefore, Bozo paid $9,000 cash on April 1.

11. Wages and salaries were all paid in cash for all earnings by employees. The wages totaled $50,000.

12. Depreciation expense was recognized. See transaction #9.

13. The expiration of an appropriate amount of prepaid rent was recognized. See transaction 10.

THINGS TO DO:

A. Prepare an analysis of Bozos financial transactions in April.

B. Prepare a balance sheet and income statement for the month of April. Ignore income taxes and interest.

C. Analyze Bozos financial position at the end of April, 200x. What is your opinion of their operations?