1 answer

3) BBE ended their first year of business with the following rights and obligations [Please complete...

Question:

3) BBE ended their first year of business with the following rights and obligations [Please complete independently from #2] (create only a balance sheet):
• BBE owns a delivery truck with a gross value of $200,000, of which $50,000 was depreciated in the first year.
• BBE is owed $25,000 from customers.
• BBE has cash on hand of $200,000
• BBE owes the employees $13,000
• BBE borrowed $150,000 to buy their truck and incurred $15,000 of interest, their first
installment payment and interest payment is due next year (this is same truck as bullet one).
Bonus Question: What is your recommendation for BBE to do with their cash at year- end?

Answers

#1

BALANCE SHEET OF BBE AT END OF YEAR 1
LIABILITIES AMOUNT ASSETS AMOUNT
CAPITAL        2,62,000 FIXED ASSETS
RESERVE & SURPLUS          -65,000 DELIVERY TRUCK        1,50,000
( 200,0000-50,000)
LOAN        1,50,000
CURRENT LIABILITIES CURRENT ASSETS
PAYABLE TO EMPLOYEE            13,000 DUE FROM CUSTOMERS            25,000
INTEREST PAYABLE            15,000 CASH ON HAND        2,00,000
TOTAL        3,75,000 TOTAL        3,75,000
.

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