Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your friend Andy decides to open a business selling cars. He starts with $600,000 of his own money, in exchange for 5,000 shares of stock

Your friend Andy decides to open a business selling cars. He starts with $600,000 of his own money, in exchange for 5,000 shares of stock on January 1, 2019. To help fund the business, you loan Andy $100,000 that Andy will pay interest on annually at 10% and he will pay you back in 5 years. During the year, he bought 20 cars for $10,000 each. He sold 15 of these for $30,000 each. He also paid wages of $15,000, rent of $10,000, interest on the loan, and advertising of $2,000. Andy also had to put down a security deposit for this 10-year lease of $1,000. On June 1, 2019, Andy also decides to invest a piece of land into his business valued at $40,000 in exchange for 400 shares of stock. At the end of the year Andy owes his employees $1,000 in wages. He paid a dividend to his investors of $2,000. The tax rate is 30%. Andy pays half of 2019 taxes this year and the other half in 2020.

I've collectively worked on this problem for nearly 6 hours now and I keep messing up. I think my issue is with the T-accounts. If anyone could show me what goes where, I would really appreciate it!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Monitoring And Auditing Practices For Effective Compliance

Authors: John E. Steiner

2nd Edition

0977843017, 978-0977843015

More Books

Students also viewed these Accounting questions

Question

What lessons in intervention design, does this case represent?

Answered: 1 week ago