Question

Problem 3-2° ( Beamer Business Year 2020 Chris opened a Beamer business on January 1, 2020. She started with $600,000; 400,000 of her own money, for which she received 4,000 shares of common stock, and $200,000 borrowed from her Uncle Phil (Note Payable). The Note Pavable to Uncle Phil requires that she pay the interest at 4% annually on December 31. She paid the $8,000 interest on December 31, 2020. She is required to repay the principal at the end of year 2024. She planned to operate her business as a corporation, Chris's Beamer Biz, Inc. (CBB, Inc.). During the year she bought ten Beamers for $40,000 each. She sold eight of the Beamers for $60,000 each. Other expenses she paid cash for were: wages, $20,000; rent, $12,000; and utilities $1,000. She signed a 20-year lease and put down a rent security deposit of $1,000. In addition to the cash she invested on January 1st, on June 1st she also invested a piece of land she owned in the business that was worth $50,000 in exchange for 500 shares of common stock. At the end of the year she owed her worker wages of $1,000. She paid a dividend of $3,000. The tax rate is 30% and Chris will pay 2020 taxes in 2021. So how did Chris do? (Do everything - Journal Entries, T-Accounts, Financial Statements).

need Everything.

Answer 1

Prepare Journal entries as follows:

Trn.	Account Titles	Debit	Credit
1	Inventory ($40,000 × 9 beamers)	$360,000
	Cash ($360,000 × 40%)		$144,000
	Accounts payable		$216,000
2	Cash [($60,000 × 8 beamers) × 60%]	$288,000
	Accounts receivable	$192,000
	Sales		$480,000
	Cost of sales ($40,000 × 8 beamers)	$320,000
	Inventory		$320,000
3	Wages expense	$24,000
	Utilities expense	$3,000
	Rent expense	$8,000
	Cash		$35,000
4	Cash (200 shares × $125)	$25,000
	Common stock		$25,000
5	Taxes payable	$35,400
	Cash		$35,400
6	Rent expense	$4,000
	Rent payable		$4,000
7	Wages expense	$3,000
	Wages payable		$3,000
8	Dividends	$5,000
	Cash		$5,000
9	Interest Expense ($200,000 × 4%)	$8,000
	Note-payable Phi	$50,000
	Cash		$58,000
10	Income tax expense	$33,000
	Income tax payable (See income statement)		$33,000

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Prepare T-accounts as follows:

Cash
Beg. Bal.	$635,000	1	$144,000
2	$288,000	3	$35,000
4	$25,000	5	$35,400
		8	$5,000
		9	$58,000
End. Bal.	$670,600
Inventory
Beg. Bal.	$80,000	2	$320,000
1	$360,000
End. Bal.	$120,000
Accounts receivable
Beg. Bal.	-
2	$192,000
End. Bal.	$192,000
Cost of sales
Beg. Bal.	-
	$320,000
End. Bal.	$320,000
Sales
		Beg. Bal.	-
		2	$480,000
		End. Bal.	$480,000
Common stock
		Beg. Bal.	$450,000
		4	$25,000
		End. Bal.	$475,000
Wage Expense
Beg. Bal.	-
3	$24,000
7	$3,000
End. Bal.	$27,000
Rent Expense
Beg. Bal.	-
3	$8,000
6	$4,000
End. Bal.	$12,000
Income tax expense
Beg. Bal.	-
10	$33,000
End. Bal.	$33,000
Income tax payable
5	$35,400	Beg. Bal.	$35,400
		10	$33,000
		End. Bal.	$33,000
Utilities Expense
Beg. Bal.	-
3	$3,000
End. Bal.	$3,000
Interest Expense
Beg. Bal.	-
9	$8,000
End. Bal.	$8,000
Note payable-Phi
9	$50,000	Beg. Bal.	$200,000
		End. Bal.	$150,000
Dividends
Beg. Bal.	-
8	$5,000
End. Bal.	$5,000
Rent payable
		Beg. Bal.	-
		6	$4,000
		End. Bal.	$4,000
Wage payable
		Beg. Bal.	$1,000
		7	$3,000
		End. Bal.	$4,000
Accounts payable
		Beg. Bal.	-
		1	$216,000
		End. Bal.	$216,000

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Prepare Income Satement as follows:

CBB, Inc.
Income Statement
For the Year Ended December 31, 2021
Sales	$480,000
Cost of sales	($320,000)
Gross margin	$160,000
Less: Operating expenses
Wages expense ($24000+$3000)	$27,000
Rent Expense ($8000+$4000)	$12,000
Utilities Expense	$3,000
Total operating expenses	$42,000
Income from operations	$118,000
Other Revenues & (Expenses)
Interest Expense	($8,000)
Income Before taxes	$110,000
Tax Expense ($110,000 × 30%)	($33,000)
Net Income	$77,000

______________________________________________________________

Prepare Retained Earnings as follows:

Statement of Retained Earnings
Beg. Balance	$79,600
Add: Net Income	$77,000
Less: Dividends	($5,000)
End. Balance	$151,600

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Prepare Balance Sheet as follows:

Balance Sheet
Assets
Current Assets
Cash	$670,600
Inventory	$120,000
Accounts receivable	$192,000
Total Current assets		$982,600
Fixed Assets
Land		$50,000
Other Assets
Security Deposits		$1,000
Total Assets		$1,033,600
Liabilities
Current Laibilities
Accounts payable	$216,000
Wages payable	$4,000
Taxes payable	$33,000
Rent payable	$4,000
Total current liabilities		$257,000
Note payable-phi		$150,000
Total Liabilities		$407,000
Owners' Equity
Common stock	$475,000
Retained earnings	$151,600
Total Owners' equity		$626,600
Total Liabilities & OE		$1,033,600