This assignment is all about to journalize the transaction, prepare income statement and Balance sheet.
Assuming in its first year of operations in 2015, that AG sold 1000 shares of 1.00 par stock to an investor for $100,000.
20,000 units of inventory was sold for $70,000, of which $20,000 was on credit. AG purchased $30,000 of inventory on credit throughout the year. Assuming that AG uses the percent of sales allowance method and estimates uncollectible receivables at 5%. The inventory purchases were (in order of purchases) 10,000 units at $1.00/unit, 5,000 units at $2.00/unit, and 20,000 units at 50cents/unit. AG uses FIFO perpetual method for accounting for inventory. AG incorporates the Lower of Cost or Market in determining ending inventory. Assume that the market value of the inventory suggested a value of $8,000.
On January 2 of 2015, AG issued bonds with a face of 100,000, stated rate of 9%, term 5 years and received $92,608. Market Rate is 11%. Interest is paid on January of next year. AG uses effective interest rate method
On 12/31. AG purchased equipment of 50,000 on credit. There was $2,000 additional fees paid in cash for the installation and set-up of the machine.
Accrue income tax at a rate of 20%.
AG had miscellaneous selling expenses of $1,000 and rent expense of 4,000. AG paid these in cash.
AG invested $20,000 in short-term investments on December 31, 2015. Half of these mature in
February of 2016 and the other half matures in July.
Please prepare a formal Income Statement and Balance Sheet based on the above information only as of 12/31/2015