MBA 5850 Fall 2017 Block 2 Case Study #1 PMD Corporation was formed by three shareholders on January 1, 2016. After a difficult first year (the company has reported retained earnings as of December 31, 2016 of negative $65,000), the company believes they need to obtain a line of credit to expand the business. The bank has requested financial statements for the nine months ended September 30, 2017 in order to determine eligibility for the line of credit. Although none of the shareholders have any accounting experience, one of them has taken on the role of bookkeeper and has prepared the following financial statements for year-to-date operations through September 30, 2017 PMD Corporation Income Statement For 2017 Product revenue Deferred revenue Cost of goods sold Depreciation expense Income Tax Expense Interest Expense Meeting expense Office expense Salary expense Net income S 250,000 S4,000 S45,000 $7,500 34,370 $1,800 13,500 4,000 80,000 $ 67,830 PMD Corporation Balance Sheet For 2017 10,000 9,000 16,000 (2,000) 50,000 S (18,000 $34,370 $ 1,800 $ 5,000 525,000 $4,500 $ 17,500 56,000 $4,000 (1,170) Accounts receivable Cash Inventory Prepaid expenses Property, plant, & equipment Accounts payable Income tax payable Interest payable Note payable- current portion Note payable - long-term Payroll taxes payable Accumulated depreciation Common stock Additional paid-in capital Retained earnings 83,000 $79,000 MBA 5850 Fall 2017 Block 2 Case Study #1 PMD Corporation was formed by three shareholders on January 1, 2016. After a difficult first year (the company has reported retained earnings as of December 31, 2016 of negative $65,000), the company believes they need to obtain a line of credit to expand the business. The bank has requested financial statements for the nine months ended September 30, 2017 in order to determine eligibility for the line of credit. Although none of the shareholders have any accounting experience, one of them has taken on the role of bookkeeper and has prepared the following financial statements for year-to-date operations through September 30, 2017 PMD Corporation Income Statement For 2017 Product revenue Deferred revenue Cost of goods sold Depreciation expense Income Tax Expense Interest Expense Meeting expense Office expense Salary expense Net income S 250,000 S4,000 S45,000 $7,500 34,370 $1,800 13,500 4,000 80,000 $ 67,830 PMD Corporation Balance Sheet For 2017 10,000 9,000 16,000 (2,000) 50,000 S (18,000 $34,370 $ 1,800 $ 5,000 525,000 $4,500 $ 17,500 56,000 $4,000 (1,170) Accounts receivable Cash Inventory Prepaid expenses Property, plant, & equipment Accounts payable Income tax payable Interest payable Note payable- current portion Note payable - long-term Payroll taxes payable Accumulated depreciation Common stock Additional paid-in capital Retained earnings 83,000 $79,000