Learning Module 1The Accounting Equation
Hot Dogs, Inc.
It is January 1, 2015 and we are going to start a corporation to sell hot dogs in a cart
on the corner of Court and Union. We form a corporation, Hot Dogs, Inc., and you
and everyone in the class invests $100 and we each get one share of stock for that
$100. Assume there are 90 of us. We elect a Board of Directors, a COO and start to
do business. In January, we borrow $10,000 from the bank and buy a new cart for
that amount. Next we buy 1,000 hot dogs and 1,000 buns. Dogs cost $0.15 and
buns are $0.05 each. For our first month, we sell 900 hot dogs for $2 each. We pay
our worker $600 and our other expenses are $300. How did we do for January?
Are we rich yet? Was it a good investment?
The Accounting Equation
= + + -
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
The Accounting Equation
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
The Accounting Equation
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
The Accounting Equation
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
The Accounting Equation
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
The Accounting Equation
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
Hot Dogs, Inc.
It is January 1, 2015 and we are going to start a corporation to sell hot dogs in a cart
on the corner of Court and Union. We form a corporation, Hot Dogs, Inc., and you
and everyone in the class invests $100 and we each get one share of stock for
that $100. Assume there are 90 of us. We elect a Board of Directors, a COO and
start to do business. In January, we borrow $10,000 from the bank and buy a new
cart for that amount. Next we buy 1,000 hot dogs and 1,000 buns. Dogs cost $0.15
and buns are $0.05 each. For our first month, we sell 900 hot dogs for $2 each. We
pay our worker $600 and our other expenses are $300. How did we do for
January? Are we rich yet? Was it a good investment?
Hot Dogs, Inc. – Issue Stock (1)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 9,000
Cash
9,000 1
Common Stock
Hot Dogs, Inc.
It is January 1, 2015 and we are going to start a corporation to sell hot dogs in a cart
on the corner of Court and Union. We form a corporation, Hot Dogs, Inc., and you
and everyone in the class invests $100 and we each get one share of stock for that
$100. Assume there are 90 of us. We elect a Board of Directors, a COO and start to
do business. In January, we borrow $10,000 from the bank and buy a new cart for
that amount. Next we buy 1,000 hot dogs and 1,000 buns. Dogs cost $0.15 and
buns are $0.05 each. For our first month, we sell 900 hot dogs for $2 each. We pay
our worker $600 and our other expenses are $300. How did we do for January?
Are we rich yet? Was it a good investment?
Hot Dogs, Inc. – Borrow Money (2)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 9,000
2 10,000
Cash
10,000 2
Note Payable
Hot Dogs, Inc.
It is January 1, 2015 and we are going to start a corporation to sell hot dogs in a cart
on the corner of Court and Union. We form a corporation, Hot Dogs, Inc., and you
and everyone in the class invests $100 and we each get one share of stock for that
$100. Assume there are 90 of us. We elect a Board of Directors, a COO and start to
do business. In January, we borrow $10,000 from the bank and buy a new cart for
that amount. Next we buy 1,000 hot dogs and 1,000 buns. Dogs cost $0.15 and
buns are $0.05 each. For our first month, we sell 900 hot dogs for $2 each. We pay
our worker $600 and our other expenses are $300. How did we do for January?
Are we rich yet? Was it a good investment?
Hot Dogs, Inc. – Purchase Cart (3)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 9,000 10,000 3
2 10,000
Cash
3 10,000
Cart
Hot Dogs, Inc.
It is January 1, 2015 and we are going to start a corporation to sell hot dogs in a cart
on the corner of Court and Union. We form a corporation, Hot Dogs, Inc., and you
and everyone in the class invests $100 and we each get one share of stock for that
$100. Assume there are 90 of us. We elect a Board of Directors, a COO and start to
do business. In January, we borrow $10,000 from the bank and buy a new cart for
that amount. Next we buy 1,000 hot dogs and 1,000 buns. Dogs cost $0.15 and
buns are $0.05 each. For our first month, we sell 900 hot dogs for $2 each. We pay
our worker $600 and our other expenses are $300. How did we do for January?
Are we rich yet? Was it a good investment?
Hot Dogs, Inc. – Buy Hot Dogs & Buns (4)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 9,000 10,000 3
2 10,000 200 4
Cash
4 200
Inventory
Hot Dogs, Inc.
It is January 1, 2015 and we are going to start a corporation to sell hot dogs in a cart
on the corner of Court and Union. We form a corporation, Hot Dogs, Inc., and you
and everyone in the class invests $100 and we each get one share of stock for that
$100. Assume there are 90 of us. We elect a Board of Directors, a COO and start to
do business. In January, we borrow $10,000 from the bank and buy a new cart for
that amount. Next we buy 1,000 hot dogs and 1,000 buns. Dogs cost $0.15 and
buns are $0.05 each. For our first month, we sell 900 hot dogs for $2 each. We
pay our worker $600 and our other expenses are $300. How did we do for
January? Are we rich yet? Was it a good investment?
Hot Dogs, Inc. – Sell Hot Dogs (5+6)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 9,000 10,000 3
2 10,000 200 4
5 1,800
Cash
4 200 180 6
Inventory
1,800 5
Sales
6 180
Cost of Goods Sold
Hot Dogs, Inc.
It is January 1, 2015 and we are going to start a corporation to sell hot dogs in a cart
on the corner of Court and Union. We form a corporation, Hot Dogs, Inc., and you
and everyone in the class invests $100 and we each get one share of stock for that
$100. Assume there are 90 of us. We elect a Board of Directors, a COO and start to
do business. In January, we borrow $10,000 from the bank and buy a new cart for
that amount. Next we buy 1,000 hot dogs and 1,000 buns. Dogs cost $0.15 and
buns are $0.05 each. For our first month, we sell 900 hot dogs for $2 each. We pay
our worker $600 and our other expenses are $300. How did we do for January?
Are we rich yet? Was it a good investment?
Hot Dogs, Inc. – Pay Wages (7)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 9,000 10,000 3
2 10,000 200 4
5 1,800 600 7
Cash
7 600
Wage Expense
Hot Dogs, Inc.
It is January 1, 2015 and we are going to start a corporation to sell hot dogs in a cart
on the corner of Court and Union. We form a corporation, Hot Dogs, Inc., and you
and everyone in the class invests $100 and we each get one share of stock for that
$100. Assume there are 90 of us. We elect a Board of Directors, a COO and start to
do business. In January, we borrow $10,000 from the bank and buy a new cart for
that amount. Next we buy 1,000 hot dogs and 1,000 buns. Dogs cost $0.15 and
buns are $0.05 each. For our first month, we sell 900 hot dogs for $2 each. We pay
our worker $600 and our other expenses are $300. How did we do for January?
Are we rich yet? Was it a good investment?
Hot Dogs, Inc. – Pay Other Expenses (8)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 9,000 10,000 3
2 10,000 200 4
5 1,800 600 7
300 8
Cash
8 300
Other Expenses
Homework
Read the syllabus and the general rules of ACCT 1010 posted on website
Complete your biography
Read “What It Takes to Be Great” article posted on website
Hot Dogs, Inc.
It is January 1, 2015 and we are going to start a corporation to sell hot dogs in a cart
on the corner of Court and Union. We form a corporation, Hot Dogs, Inc., and you
and everyone in the class invests $100 and we each get one share of stock for that
$100. Assume there are 90 of us. We elect a Board of Directors, a COO and start to
do business. In January, we borrow $10,000 from the bank and buy a new cart for
that amount. Next we buy 1,000 hot dogs and 1,000 buns. Dogs cost $0.15 and
buns are $0.05 each. For our first month, we sell 900 hot dogs for $2 each. We pay
our worker $600 and our other expenses are $300. How did we do for January?
Are we rich yet? Was it a good investment?
Sales 1,800$
Cost of Goods Sold 180
Gross Profit 1,620
Operating Expenses
Wage Expense 600$
Other Expenses 300
Total Operating Expenses 900
Operating Income 720
Other Revenue & (Expenses)
None -
Income before Taxes 720
Tax Expense -
Net Income 720$
Earnings per share 8.00$
Hot Dogs, Inc.
Income Statement
For the Month Ended January 31, 2015
Common Retained
Stock Earnings Total
Beginning Balance, December 31, 2014 -$ -$ -$
Common Stock Issued 9,000 9,000
Net Income 720 720
Less: Dividends Declared - -
Ending Balance, January 31, 2015 9,000$ 720$ 9,720$
Hot Dogs, Inc.
Statement of Owners' Equity
For the Month Ended January 31, 2015
Assets Liabilities & Owners' Equity
Liabilities
Current Assets Current Liabilities
Cash 9,700$ None -$
Inventory 20
Total Current Assets 9,720 Total Current Liabilities -
Long-Term Debt
Fixed Assets Note Payable 10,000$
Cart 10,000$ Total Liabilities 10,000
Net Fixed Assets 10,000 Owners' Equity
Common Stock 9,000$
Other Assets Retained Earnings 720
None -$ Total Owners' Equity 9,720
Total Assets 19,720$ Total Liabilities & Owners' Equity 19,720$
Hot Dogs, Inc.
Balance Sheet
January 31, 2015
The Matching Concept
Expenses must be recognized in the same accounting period as the revenues they
helped to generate, even if no payment has been made. For indirect costs that are
difficult to match to specific revenues, expenses are recorded when incurred.
How would the Hot Dogs, Inc. financials have changed if we owed our worker $100
at the end of January for work she did the last week of the month?
Hot Dogs, Inc. – Wages Owed (9)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
100 9
Wages Payable
7 600
9 100
Wage Expense
Sales 1,800$
Cost of Goods Sold 180
Gross Profit 1,620
Operating Expenses
Wage Expense 700$
Other Expenses 300
Total Operating Expenses 1,000
Operating Income 620
Other Revenue & (Expenses)
None -
Income before Taxes 620
Tax Expense -
Net Income 620$
Earnings per share 6.89$
Hot Dogs, Inc.
Income Statement
For the Month Ended January 31, 2015
Common Retained
Stock Earnings Total
Beginning Balance, December 31, 2014 -$ -$ -$
Common Stock Issued 9,000 9,000
Net Income 620 620
Less: Dividends Declared - -
Ending Balance, January 31, 2015 9,000$ 620$ 9,620$
Hot Dogs, Inc.
Statement of Owners' Equity
For the Month Ended January 31, 2015
Assets Liabilities & Owners' Equity
Liabilities
Current Assets Current Liabilities
Cash 9,700$ Wages Payable 100$
Inventory 20
Total Current Assets 9,720 Total Current Liabilities 100
Long-Term Debt
Fixed Assets Note Payable 10,000$
Cart 10,000$ Total Liabilities 10,100
Net Fixed Assets 10,000 Owners' Equity
Common Stock 9,000$
Other Assets Retained Earnings 620
None -$ Total Owners' Equity 9,620
Total Assets 19,720$ Total Liabilities & Owners' Equity 19,720$
Hot Dogs, Inc.
Balance Sheet
January 31, 2015
Homework
Read pages 13-19 of The Map
Complete problem 1 (BBBB, Inc.) on page 10 of The Map – use T accounts to
prepare income statement, statement of owners’ equity, and balance sheet
BBBB, Inc.
Everyone in the class invested $50 each in Billy Bob’s Bodacious Biffs. For your
investment, you each got one share of common stock. Assume there are 100 of
you. During 2015, BBBB, Inc. borrowed $100,000 to be repaid in five years with
interest of 10% to be paid yearly and bought a piece of land for future expansion of
the business for $30,000 ($2,000 down and the rest to be paid next year). Also
during the year, the company purchased 10,000 Biffs for $8 each and sold 9,000 for
$20 each. The company also paid a security deposit of $6,000 on the building it is
renting, rent of $12,000, salaries of $24,000, and the interest on the loan of
$10,000. Taxes for 2015 were 30% and these will be paid in 2016. How did you do?
BBBB, Inc.
Everyone in the class invested $50 each in Billy Bob’s Bodacious Biffs. For your
investment, you each got one share of common stock. Assume there are 100 of
you. During 2015, BBBB, Inc. borrowed $100,000 to be repaid in five years with
interest of 10% to be paid yearly and bought a piece of land for future expansion of
the business for $30,000 ($2,000 down and the rest to be paid next year). Also
during the year, the company purchased 10,000 Biffs for $8 each and sold 9,000 for
$20 each. The company also paid a security deposit of $6,000 on the building it is
renting, rent of $12,000, salaries of $24,000, and the interest on the loan of
$10,000. Taxes for 2015 were 30% and these will be paid in 2016. How did you do?
BBBB, Inc. – Issue Stock (1)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 5,000
Cash
5,000 1
Common Stock
BBBB, Inc.
Everyone in the class invested $50 each in Billy Bob’s Bodacious Biffs. For your
investment, you each got one share of common stock. Assume there are 100 of
you. During 2015, BBBB, Inc. borrowed $100,000 to be repaid in five years with
interest of 10% to be paid yearly and bought a piece of land for future expansion of
the business for $30,000 ($2,000 down and the rest to be paid next year). Also
during the year, the company purchased 10,000 Biffs for $8 each and sold 9,000 for
$20 each. The company also paid a security deposit of $6,000 on the building it is
renting, rent of $12,000, salaries of $24,000, and the interest on the loan of
$10,000. Taxes for 2015 were 30% and these will be paid in 2016. How did you do?
BBBB, Inc. – Borrow Money (2)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 5,000
2 100,000
Cash
100,000 2
Note Payable
BBBB, Inc.
Everyone in the class invested $50 each in Billy Bob’s Bodacious Biffs. For your
investment, you each got one share of common stock. Assume there are 100 of
you. During 2015, BBBB, Inc. borrowed $100,000 to be repaid in five years with
interest of 10% to be paid yearly and bought a piece of land for future expansion
of the business for $30,000 ($2,000 down and the rest to be paid next year). Also
during the year, the company purchased 10,000 Biffs for $8 each and sold 9,000 for
$20 each. The company also paid a security deposit of $6,000 on the building it is
renting, rent of $12,000, salaries of $24,000, and the interest on the loan of
$10,000. Taxes for 2015 were 30% and these will be paid in 2016. How did you do?
BBBB, Inc. – Purchase Land (3)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 5,000 2,000 3
2 100,000
Cash
3 30,000
Land
28,000 3
Land Payable
BBBB, Inc.
Everyone in the class invested $50 each in Billy Bob’s Bodacious Biffs. For your
investment, you each got one share of common stock. Assume there are 100 of
you. During 2015, BBBB, Inc. borrowed $100,000 to be repaid in five years with
interest of 10% to be paid yearly and bought a piece of land for future expansion of
the business for $30,000 ($2,000 down and the rest to be paid next year). Also
during the year, the company purchased 10,000 Biffs for $8 each and sold 9,000
for $20 each. The company also paid a security deposit of $6,000 on the building it
is renting, rent of $12,000, salaries of $24,000, and the interest on the loan of
$10,000. Taxes for 2015 were 30% and these will be paid in 2016. How did you do?
BBBB, Inc. – Buy Biffs (4)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 5,000 2,000 3
2 100,000 80,000 4
Cash
4 80,000
Inventory
BBBB, Inc.
Everyone in the class invested $50 each in Billy Bob’s Bodacious Biffs. For your
investment, you each got one share of common stock. Assume there are 100 of
you. During 2015, BBBB, Inc. borrowed $100,000 to be repaid in five years with
interest of 10% to be paid yearly and bought a piece of land for future expansion of
the business for $30,000 ($2,000 down and the rest to be paid next year). Also
during the year, the company purchased 10,000 Biffs for $8 each and sold 9,000 for
$20 each. The company also paid a security deposit of $6,000 on the building it is
renting, rent of $12,000, salaries of $24,000, and the interest on the loan of
$10,000. Taxes for 2015 were 30% and these will be paid in 2016. How did you do?
BBBB, Inc. – Sell Biffs (5+6)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 5,000 2,000 3
2 100,000 80,000 4
5 180,000
Cash
180,000 5
Sales
4 80,000 72,000 6
Inventory
6 72,000
Cost of Goods Sold
BBBB, Inc.
Everyone in the class invested $50 each in Billy Bob’s Bodacious Biffs. For your
investment, you each got one share of common stock. Assume there are 100 of
you. During 2015, BBBB, Inc. borrowed $100,000 to be repaid in five years with
interest of 10% to be paid yearly and bought a piece of land for future expansion of
the business for $30,000 ($2,000 down and the rest to be paid next year). Also
during the year, the company purchased 10,000 Biffs for $8 each and sold 9,000 for
$20 each. The company also paid a security deposit of $6,000 on the building it is
renting, rent of $12,000, salaries of $24,000, and the interest on the loan of
$10,000. Taxes for 2015 were 30% and these will be paid in 2016. How did you do?
BBBB, Inc. – Pay Security Deposit (7)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 5,000 2,000 3
2 100,000 80,000 4
5 180,000 6,000 7
Cash
7 6,000
Security Deposit
BBBB, Inc.
Everyone in the class invested $50 each in Billy Bob’s Bodacious Biffs. For your
investment, you each got one share of common stock. Assume there are 100 of
you. During 2015, BBBB, Inc. borrowed $100,000 to be repaid in five years with
interest of 10% to be paid yearly and bought a piece of land for future expansion of
the business for $30,000 ($2,000 down and the rest to be paid next year). Also
during the year, the company purchased 10,000 Biffs for $8 each and sold 9,000 for
$20 each. The company also paid a security deposit of $6,000 on the building it is
renting, rent of $12,000, salaries of $24,000, and the interest on the loan of
$10,000. Taxes for 2015 were 30% and these will be paid in 2016. How did you do?
BBBB, Inc. – Pay Rent (8)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 5,000 2,000 3
2 100,000 80,000 4
5 180,000 6,000 7
12,000 8
Cash
8 12,000
Rent Expense
BBBB, Inc.
Everyone in the class invested $50 each in Billy Bob’s Bodacious Biffs. For your
investment, you each got one share of common stock. Assume there are 100 of
you. During 2015, BBBB, Inc. borrowed $100,000 to be repaid in five years with
interest of 10% to be paid yearly and bought a piece of land for future expansion of
the business for $30,000 ($2,000 down and the rest to be paid next year). Also
during the year, the company purchased 10,000 Biffs for $8 each and sold 9,000 for
$20 each. The company also paid a security deposit of $6,000 on the building it is
renting, rent of $12,000, salaries of $24,000, and the interest on the loan of
$10,000. Taxes for 2015 were 30% and these will be paid in 2016. How did you do?
BBBB, Inc. – Pay Salaries (9)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 5,000 2,000 3
2 100,000 80,000 4
5 180,000 6,000 7
12,000 8
24,000 9
Cash
9 24,000
Salary Expense
BBBB, Inc.
Everyone in the class invested $50 each in Billy Bob’s Bodacious Biffs. For your
investment, you each got one share of common stock. Assume there are 100 of
you. During 2015, BBBB, Inc. borrowed $100,000 to be repaid in five years with
interest of 10% to be paid yearly and bought a piece of land for future expansion of
the business for $30,000 ($2,000 down and the rest to be paid next year). Also
during the year, the company purchased 10,000 Biffs for $8 each and sold 9,000 for
$20 each. The company also paid a security deposit of $6,000 on the building it is
renting, rent of $12,000, salaries of $24,000, and the interest on the loan of
$10,000. Taxes for 2015 were 30% and these will be paid in 2016. How did you do?
BBBB, Inc. – Pay Interest (10)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
1 5,000 2,000 3
2 100,000 80,000 4
5 180,000 6,000 7
12,000 8
24,000 9
10,000 10
Cash
10 10,000
Interest Expense
BBBB, Inc.
Everyone in the class invested $50 each in Billy Bob’s Bodacious Biffs. For your
investment, you each got one share of common stock. Assume there are 100 of
you. During 2015, BBBB, Inc. borrowed $100,000 to be repaid in five years with
interest of 10% to be paid yearly and bought a piece of land for future expansion of
the business for $30,000 ($2,000 down and the rest to be paid next year). Also
during the year, the company purchased 10,000 Biffs for $8 each and sold 9,000 for
$20 each. The company also paid a security deposit of $6,000 on the building it is
renting, rent of $12,000, salaries of $24,000, and the interest on the loan of
$10,000. Taxes for 2015 were 30% and these will be paid in 2016. How did you
do?
BBBB, Inc. – Income Taxes Owed (11)
= + + -Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance Sheet Income Statement
Assets Liabilities Owners' Equity Revenue Expenses
11 18,600
Tax Expense
18,600 11
Taxes Payable
Sales 180,000$
Cost of Goods Sold 72,000
Gross Profit 108,000
Operating Expenses
Salary Expense 24,000$
Rent Expense 12,000
Total Operating Expenses 36,000
Operating Income 72,000
Other Revenue & (Expenses)
Interest Expense (10,000)
Income before Taxes 62,000
Tax Expense 18,600
Net Income 43,400$
Earnings per share 434.00$
BBBB, Inc.
Income Statement
For the Year Ended December 31, 2015
Common Retained
Stock Earnings Total
Beginning Balance, December 31, 2014 -$ -$ -$
Common Stock Issued 5,000 5,000
Net Income 43,400 43,400
Less: Dividends Declared - -
Ending Balance, December 31, 2015 5,000$ 43,400$ 48,400$
BBBB, Inc.
Statement of Owners' Equity
For the Year Ended December 31, 2015
Assets Liabilities & Owners' Equity
Liabilities
Current Assets Current Liabilities
Cash 151,000$ Taxes Payable 18,600$
Inventory 8,000 Land Payable 28,000
Total Current Assets 159,000 Total Current Liabilities 46,600
Long-Term Debt
Fixed Assets Note Payable 100,000$
Land 30,000$ Total Liabilities 146,600
Net Fixed Assets 30,000 Owners' Equity
Common Stock 5,000$
Other Assets Retained Earnings 43,400
Security Deposit 6,000$ Total Owners' Equity 48,400
Total Assets 195,000$ Total Liabilities & Owners' Equity 195,000$
BBBB, Inc.
Balance Sheet
December 31, 2015