Question

ACTG223: H1 - Financial Accounting 201 Refresher wing transactions occurred during 2019; the first year of operations for the Bozeman Ski Shop, Incorporated. 1. BSS, Inc. was organized as a corporation in Montana on January 1, 2019. BSS sold 20,000 shares of common stock at $10 per share. 2. On Jan. 1, 2019 a ski tuning machine was purchased for $50,000. It will be used for 5 years. The straight-line method will be used, and there is no salvage value. 3. The business paid $250,000 in cash to vendors for skis. 4. A building was rented (including insurance and utilities) for 12 months at $2,500 per month; all twelve-monthly payments were paid in cash during the year. 5. In 2019, cash paying customers bought $250,000 of ski merchandise. 6. Employees were paid $110,000 for wages in 2019, which includes a $30,000 salary to the owner/manager. 7. The business also purchased $50,000 of skis on account from vendors. This amount was still owed at December 31, 2019. 8. The business also sold $150,000 of skis to customers on account. This amount was still owed at December 31, 2019. 9. The year-end inventory taken on 12/31/2019 of unsold ski merchandise amounted to $100,000 at cost. 10. On December 15th, 2019 the corporation declared and paid cash dividends of $.50 per share. 11. The corporate income tax rate is 30%, and the income taxes will not be paid until the end of February 2020. Required: For Wednesday 8/28 Prepare the following financial statements for Bozeman Ski Shop, Inc. for 2018; a Multi-Step Incom Statement, the Statement of Stockholders' Equity, and a Classified Balance Sheet, using the accrual basis of accounting. ou may determine the amounts any way you like (journal entries. ccounts, trial balances, worksheets or just using math.

Answer 1

Bozeman Ski Shop Income Statement For the Year Ended December 31, 2019 Sales revenue (250000+150000) Less: Cost of goods sold Gross profit Less: Operating expenses: Depreciation expense (50000/5) 10,000 Rent expense 2,500 Wages expense 110,000 400,000 200,000 200,000 27,500 100,000 150,000 277,500 Total Operating Expenses Income before income tax Income tax expense (77500*30%) Net income 122,500 77,500 23,250 54,250 Bozeman Ski Shop Balance Sheet For the Year Ended December 31, 2019 Assets Current assets: Cash Inventory Accounts receivable Total current assets Fixed assets: Machinery 50,000 Less: Accumulated depreciation 10,000 Total fixed assets Total assets Liabilities and Shareholders' Equity Current liabilities: Accounts payable Tax payable Total current liabilities Shareholders' equity Common stock Retained earnings Total Shareholders' equity Total liabilities and shareholders' Equity 40,000 40,000 317,500 $ $ 50,000 23,250 73,250 Bozeman Ski Shop Statement of Stockholders' Equity For the Year Ended December 31, 2019 Common Stock Retained Earnings 200,000 200,000 44,250 244,250 317,500 54,250 Beginning Balance Add: Net income Less: Dividend Ending Balance 10,000 44,250 200,000 $ Calculation for Cost of Goods Sold: Purchases (250000+50000) Less: Ending inventory Cost of Goods Sold Amount 300,000 100,000 200,000

Dr Beginning Bal. Common Stock Sales revenue Cash Machinery 200,000 Purchase 250,000 Rent expense Wages expense Dividend (20000*0.5) CR 50,000 250,000 2,500 110,000 10,000 Ending Bal. 27,500 $ 450,000 $ 450,000