The Herbert, Inc. is a retail store that started in January 2020. Initial capital was acquired by

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Question:

The Herbert, Inc. is a retail store that started in January 2020. Initial capital was acquired by issuing shares of common stock and by obtaining a bank loan. The CEO, Herbert, has kept the records below and asks for your help in preparing an income statement for the year ended Dec. 31, 2020.

• Cash receipts (January 1 – December 31, 2020)
From customers $484,800
From issuance of common stock 195,000
From bank loan 120,000
Total $799,800

• Cash payments (January 1 – December 31, 2020)
Purchase of inventory $319,000
Utilities 49,000
Salaries 24,000
Insurance 22,000
Purchase of equipment 77,000
Total $491,000

• The bank loan was made on March 31, 2020. A note was signed requiring payment of interest and principal on March 31, 2021. The interest rate is 10%.
• The equipment was purchased on Jan. 1, 2020, and has an estimated useful life of 5 years with no salvage value. Depreciation expense is calculated using the straight-line method.
• Inventory on hand at Dec. 31, 2020 cost $119,000.
• The following amounts are owed by The Herbert at Dec. 31, 2020.
o $39,000 to inventory suppliers
o $5,000 to employees for salaries

• The following amounts are due to The Herbert at Dec. 31, 2020.

o $12,000 from customers

• The Herbert recorded restructuring charges of $24,840, which, Herbert believes, is one-time, namely non-recurring.
• Income tax rates = 20%

Required:
Complete a multi-step income statement of The Herbert for the fiscal year ended on December 31, 2020 (Ignore EPS disclosures).

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