Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

The Fast Track Sports Company was started by John Ross early in 2012. Initial capital was acquired by issuing shares of common stock to various investors and by obtaining a bank loan. The company operates a retail store that sells sporting goods and related apparel. Business was so good during the first year of operation that John is considering opening a second store on the other side of town. The funds necessary for expansion will come from a new bank loan. In order to approve the loan, the bank requires financial statements.

John asks for your help and presents you with the following information for the year ending December 31, 2012:

1). Cash receipts consisted of the following:
a). From customers $360,000
b). From issue of common stock 100,000
c). From bank loan 100,000

2). Cash disbursements were as follows:
a). Purchase of inventory $300,000
b). Rent 15,000
c). Salaries 30,000
d). Utilities 5,000
e). Insurance 3,000
c). Purchase of equipment & furniture 40,000

3). The bank loan was made on March 31, 2012. A note was signed requiring payment of interest and principal on March 31, 2013. The interest rate is 12%.

4). The equipment and furniture were purchased on January 3, 2012, and have an estimated useful life of 10 years with no anticipated salvage value. Depreciation is based on the straight-line method.

5). Inventories on hand at the end of year cost $100,000.

6). Amounts owed at December 31, 2012 were as follows:
a). To suppliers of inventory $20,000
b). To the utility company 1,000

7). Rent on the store building is $1,000 per month. On December 31, 2012, four months' rent was paid in advance.

Required:
Prepare the Fast Track Sports Company's Income Statement and Balance Sheet for its first accounting period under the accrual basis of accounting. Assume that the company is not subject to federal, state, or local income tax.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M925720

Have any Question? 


Related Questions in Basic Finance

1 discuss the risks or benefits to the exporter and

1. Discuss the risks or benefits to the exporter and important contrasting accounts receivable financing and factoring. 2. Discuss the role of the factor for the exporter. How does the factor help an exporter? 3. Contras ...

Given the following informationcurrent stock price 35stock

Given the following information: Current stock price $35 Stock beta: 2 Risk-free rate: 4% Market risk premium: 6% Expected dividend, D 1 : $3.00 Expected long-run growth rate of dividends: 6% What is the required return ...

1 consider the similarities and differences between basic

1. Consider the similarities and differences between basic research and applied research. What does each contribute to our knowledge about behavior? 2. Describe the characteristics of descriptive, correlational, and expe ...

1 in classless addressing we know the first and the last

1. In classless addressing, we know the first and the last address in the block. Can we find the prefix length? If the answer is yes, show the process. 2. In classless addressing, we know the first address and the number ...

1 explain why the priorities for liquidation are determined

1. Explain why the priorities for liquidation are determined as they are. Do you agree with the order? 2. What is the difference between economic failure and financial distress? Which situation is likely to lead to liqui ...

1 why do researchers use deception2 why do some people

1. Why do researchers use deception? 2. Why do some people object to the use of deception in research? 3. What four goals should a debriefing accomplish?

What main effects and interaction could you test with the

What main effects and interaction could you test with the design you developed for Question 3? Are you predicting that you will obtain an interaction? Question 1 Build on the design you created in Question 1 to test the ...

How does the value of an unlevered firm change if it takes

How does the value of an unlevered firm change if it takes on debt in the presence of corporate taxes? Repeat the analysis for ANF from the previous problem, after relaxing only the "no corporate tax" assumption of perfe ...

The following is from a business report by the reuters news

The following is from a business report by the Reuters news agency: "Online retailer Overstock.com . . . posted a surprise quarterly profit and its shares jumped as much as 34 percent to their highest level in almost two ...

State and explain two reasons why firms hedgea major bread

State and explain two reasons why firms hedge? A major bread maker is planning to purchase wheat in the near future. Identify and explain the appropriate hedging strategy? Explain how the implied repo rate on a spread tr ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro