Question

Assignment: Create a Balance Sheet with the information below

ABC Service Corporation was organized on January 1. 2002. On that date, the investors exchanged
$36,000 cash for all the stock of the company. On the same day, the corporation borrowed $10,000
from a local bank and signed a three-year note payable. The interest is payable each December 31.
Operations started immediately.

At the end of 2002, the corporation had completed the following additional business
transactions (summarized)

(a) Performed services and billed customers for $100,500, of which $94,500 was collected in
cash by year-end.
(b) Purchased service supplies for $20,000 cash. Used up $5,000 of service supplies while
rendering services.
(c) Paid $54,000 cash for other service expenses.
(d) Paid $1,500 in annual interest expense on the note payable.
(e) Paid $8,000 of income taxes in cash to the Internal Revenue Service (IRS)

Answer 1

				ABC Service Corporation
				Balance Sheet
				As of December 31, 2002
		Assets
		Cash		57,000		(36,000 + 10,000 + 94,500 - 20,000 - 54,000 - 1,500 - 8,000)
		Accounts Receivable		6,000		(100,500 - 94,500)
		Supplies		15,000		(20,000 - 5,000)
		Total Assets		78,000
			Liabilities and Stockholders' Equity
		Liabilities
		Notes Payable		10,000
		Stockholders' Equity
		Common Stock	36,000
		Retained Earnings	32,000			(100,500 - 5,000 - 54,000 - 1,500 - 8,000)
		Total Stockholders' Equity		68,000
		Total Liabilities and Stockholders' Equity		78,000