Molly's Scooters, Inc.

1 Accounts Payable Cash To record payment of accounts payable 2 Cash Accounts Receivable To record collection of accounts receivable 3 Inventory Cash Accounts Payable To record purchases of 10 @ $15,000 4 Cash Accounts Receivable Sales To record sale of 13 @ $25,0000 5 Cost of Goods Sold Inventory To record cost of sales (10*$12,000) + (3*$15,000) 6 Taxes Payable Cash To record payment of 20x7 taxes 7 Insurance Expense Prepaid Insurance Cash To record purchase of 2-year insurance policy and insurance expense 8 Wages Payable Wages Expense Cash Wages Payable To record wages

30,000 30,000

40,000 40,000

9 Rent Expense Cash Prepaid Rent Rent Payable To record 20x2 rent 10 Office Expense Cash To record payment of office expenses

24,000 30,000 2,000 4,000

7,000 7,000

150,000 45,000 105,000

11 Cash Common Stock To record sale of 1,000 shares

50,000 50,000

243,750 81,250 325,000

12 Interest Expense Note Payable Cash To record payment on Note Payable 13 Retained Earnings Cash To record payment of dividend 14 Depreciation Expense Accumulated Depreciation To record depreciation expense ($600,000-$50,000)/20 15 Tax Expense Cash Taxes Payable To record 20x2 taxes 16 Sales

10,000 10,000 20,000

165,000 165,000 10,000 10,000

8,000 8,000

27,500 27,500

1,200 3,600 4,800

12,990 0 12,990

10,000 47,000 45,000 12,000

325,000 165,000 47,000 24,000 1,200 7,000 10,000 27,500 12,990 30,310

Cost of Goods Sold Wages Expense Rent Expense Insurance Expense Office Expenses Interest Expense Depreciation Expense Tax Expense Retained Earnings To close books

Molly's Scooters Assets Cash BB 50,000 30,000 2 40,000 45,000 4 243,750 8,000 11 50,000 4,800 45,000 30,000 7,000 20,000 10,000 0 383,750 199,800 183,950 Accounts Receivable BB 40,000 40,000 4 81,250

= 1 3 6 7 8 9 10 12 13 15

Liabilities + Accounts Payable 1 30,000 30,000 BB 105,000 3

Owners' Equity + ( Revenues Common Stock Sales 200,000 BB 325,000 50,000 11 16 325,000 250,000 Retained Earnings 10,000 350,000 BB 30,310 16 10,000 380,310 370,310

Expenses ) Cost of Goods Sold 5 165,000 165,000 16

Taxes Payable 8,000 8,000 BB 12,990 15

13

Wages Expense 47,000 47,000 16

Wages Payable 10,000 10,000 BB 12,000 8

Rent Expense 24,000 24,000 16

2 9

Rent Payable 4,000 4,000 BB 0 9

Insurance Expense 7 1,200 1,200 1,200 16

BB 3

Inventory 120,000 165,000 150,000 270,000 165,000 105,000

Note Payable 12 10,000 100,000 BB 90,000

12

Interest Expense 10,000 10,000 16

Prepaid Insurance BB 0 7 3,600

10

Office Expenses 7,000 7,000 16

Prepaid Rent 2,000

Depreciation Expense 14 27,500 27,500 16

BB

Equipment 600,000 15

Tax Expense 12,990 12,990 16

Accumulated Depreciation 110,000 BB 27,500 14 137,500 Security Deposit 2,000

BB

Molly's Scooters, Inc. Income Statement For the Year Ended December 31, 20x8 Sales Cost of Goods Sold Gross Margin Operating Expenses Rent Expense Wage Expense Depreciation Expense Insurance Expense Office Expenses Total Operating Expenses Operating Income Other Revenues & <Expenses> Interest Expense Income Before Taxes Tax Expense Net Income Earnings Per Share $ 325,000 165,000 160,000

24,000 47,000 27,500 1,200 7,000 106,700 53,300

<

$ $

10,000 > 43,300 12,990 30,310 6.38

Bella's Boutique, Inc. Balance Sheet December 31, 2008 Assets Current Assets Cash Accounts Receivable Inventory Prepaid Insurance Total Current Assets Fixed Assets Land Building Equipment Subtotal Less: Accumulated Depreciation Net Fixed Assets Other Assets Security Deposit Total Assets Liabilities Current Liabilities Accounts Payable Salaries Payable Taxes Payable Current Portion of Long-Term Debt Total Current Liabilities Long-Term Debt Note Payable Total Liabilities Owners' Equity Common Stock Retained Earnings Total Owners' Equity

50,000 60,000 90,000 9,000 209,000

59,000 11,000 30,000 10,000 110,000

20,000 200,000 120,000 340,000 (60,000) 280,000 1,000

80,000 190,000

$ 100,000 200,000 300,000 $ 490,000

Total Liabilities and Owners' Equity $ 490,000

Bella's Boutique, Inc. Income Statement For the Year Ended December 31, 2008 Sales Cost of Goods Sold Gross Margin Operating Expenses Salary Expense Rent Expense Depreciation Expense Advertising Expense Utilities Expense Total Operating Expenses Operating Income Other Revenues & <Expenses> Interest Expense Income Before Taxes Tax Expense Net Income Earnings Per Share $ 1,000,000 400,000 600,000

160,000 60,000 40,000 15,000 10,000 285,000 315,000

<

$ $

10,000 > 305,000 91,500 213,500 5.02

Bella's Boutique, Inc. Statement of Owners' Equity For the Year Ended December 31, 2008 Common Stock Beginning Balance, 12/31/07 Issuance of Stock Net Earnings for the Year Dividends Declared Ending Balance, 12/31/08 $ 40,000 60,000 Retained Earnings $ 8,000 $

Totals 48,000 60,000 213,500 (21,500) 300,000

100,000

213,500 (21,500) 200,000 $

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

C A D B A C B B D B B B D C C D B A C C D D B B C C D C D D B D D D E E B