Last year (in early 2011), you started a business manufacturing and distributing simple wooden toys for children that you sell to small boutiques on terms of payment in 30 days. Your first fiscal year ended December 31, 2011 and you are preparing your first annual financial statements. Based on the following information, prepare a balance sheet and income statement for your first year in business. Make reasonable estimates for any data that you feel is necessary but missing, explain the basis for your estimates. What kind of financial condition and level of initial success do your statements reflect?
Contributed capital (stock) $10,000
Bank loan at 6% per annum, originally borrowed 1/1/2011 $10,000; owing 12/31/2011 $5000
Sales $101,000 (collected, $91,000; outstanding receivables 10,000)
Labor expense $55,000 (including your salary of $25,000)-all paid in 2011
Material used in production during the year $13,000
Inventories of materials on hand 12/31/2011 $6000
Office and production equipment & tools purchased $15,000 (to be depreciated evenly over five years)
Rent $9,000
Utilities, supplies, miscellaneous overhead $5,400
Total taxes of 33% on profits, payable April 2012
Cash in the bank at 12/31/2011 $12000
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