Question

Assignment: Create a Balance Sheet with the information below. Please explain each step!

ABC Service Corporation was organized on January 1. 2002. On that date, the investors exchanged
$36,000 cash for all the stock of the company. On the same day, the corporation borrowed $10,000
from a local bank and signed a three-year note payable. The interest is payable each December 31.
Operations started immediately.

At the end of 2002, the corporation had completed the following additional business
transactions (summarized)

(a) Performed services and billed customers for $100,500, of which $94,500 was collected in
cash by year-end.
(b) Purchased service supplies for $20,000 cash. Used up $5,000 of service supplies while
rendering services.
(c) Paid $54,000 cash for other service expenses.
(d) Paid $1,500 in annual interest expense on the note payable.
(e) Paid $8,000 of income taxes in cash to the Internal Revenue Service (IRS)

Answer 1