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3. On October 1, 2018 – An investor purchased 100 shares of stock (100%) of ABC Co. for $1,500,000. The 1,500,000 was paid directly to ABC in exchange for common stock. ABC Company purchased equipment for $80,000; paying $20,000 cash and financing (through a long-term note with a stated rate of interest of 10%) the remaining portion. ABC Company prepaid a year’s (12months) worth of insurance AND rent. Insurance payment was $24,000 and the rent payment was $36,000.
ABC had the following transactions after 10/1/2018:
Sold services for $320,000. $90,000 cash received and the remaining amount will be received in 2019
ABC was given in cash $30,000 for future services. The services are to be provided to the client in 2019.
ABC paid $25,000 for advertising displayed. ABC paid $20,000 for miscellaneous supplies. Cash was paid for both.
Paid $40,000 in cash for salaries for 2018. The end of the year was in the middle of the week and the total unpaid salary expense for 2018 was $5,000. This $5,000 will not be paid until first week of 2019.
Sold more services for $50,000. $20,000 of the $50,000 was received immediately in cash. The remaining portion is expected to be paid in February of 2019. At year-end the amount of supplies on-hand was $3,000. ABC had interest expense that it did not pay but owed at the end of the year. Round all numbers to the nearest dollar.
ABC declared and paid a dividend of $3,000.
Prepare a Balance Sheet and Income Statement in good form for the year-ended 12/31/2018. 40pts