Question

3) BBE ended their first year of business with the following rights and obligations [Please complete independently from #2] (create only a balance sheet):

• BBE owns a delivery truck with a gross value of $200,000, of which $50,000 was depreciated in the first year.

• BBE is owed $25,000 from customers.

• BBE has cash on hand of $200,000

• BBE owes the employees $13,000

• BBE borrowed $150,000 to buy their truck and incurred $15,000 of interest, their first

installment payment and interest payment is due next year (this is same truck as bullet one).

Bonus Question: What is your recommendation for BBE to do with their cash at year- end?

Answer 1

#1

BALANCE SHEET OF BBE AT END OF YEAR 1
LIABILITIES	AMOUNT	ASSETS	AMOUNT
CAPITAL	2,62,000	FIXED ASSETS
RESERVE & SURPLUS	-65,000	DELIVERY TRUCK	1,50,000
		( 200,0000-50,000)
LOAN	1,50,000
CURRENT LIABILITIES		CURRENT ASSETS
PAYABLE TO EMPLOYEE	13,000	DUE FROM CUSTOMERS	25,000
INTEREST PAYABLE	15,000	CASH ON HAND	2,00,000
TOTAL	3,75,000	TOTAL	3,75,000