Terry Lopez organized Read More Store as a sole proprietorship, contributing $100,000 cash to start the business. The store completed its first year of operations on December 31, 2010. On that date, the following financial items for the year were determined:
Cash on hand and in the bank .......................................................... $ 48,900
Amounts due from customers from sales of books .................................... 26,000
Equipment ................................................................................... 48,000
Amounts owed to publishers for books purchased ...................................... 8,000
One-year note payable to a local bank .................................................... 2,120
Terry Lopez, Capital account balance .................................................. 112,780
The owner made no withdrawals during the year.
Required:
1. Using typical account titles, prepare a balance sheet as of the end of 2010.
2. Using the statement of owner's equity equation and an opening balance of $0, compute the amount of net income for the year.