Use the information below to construct the Dec. 31, 2014 Balance Sheet and deferred tax and valuation equity worksheets.

Note: Not all items will be used

(all balances are as of 12/31/14, unless otherwise stated)

a.	Cash on hand and in checking account	30,000
b.	Market value of all equipment	240,000
c.	2013 Income taxes paid in 2014	31,000
d.	Cash operating expenses paid in 2014	515,000
e.	Principal portion of 15-year loan due in 2015	14,000
f.	Principal paid on 15-year loan during 2014	12,500
g.	Inventories: Supplies	4,500
h.	Insurance premiums for 2015 paid in Dec. 2014	19,500
i.	Investment in local brewery made in 2006 for $50,000,
	estimated market value of 62,000 as of 12/31/14	???
j.	Change in accounts payable during 2014	1,500
k.	Inventories: Completed goods	15,000
l.	Principal balance on operating (short-term) loan	10,000
m.	Accrued interest on 15-year note	1,200
n.	Accrued interest on operating (short-term) loan	500
o.	Rent for January 2015, paid in Dec. 2014	5,200
p.	Accumulated depreciation on equipment	65,000
q.	Accrued income, social security, and payroll taxes	21,000
r.	2015 liquor license fees, paid in Dec. 2014	4,000
s.	Original cost of all equipment owned	310,000
t.	Legal/accountant services used in 2014, bill not yet received	2,500
u.	Accounts payable	8,000
v.	Total principal balance on 15-year loan	223,000
w.	Certificate of deposit with cash value of $50,000 as of 12/31/14	50,000
x.	Capital originally contributed by owner(s)	75,000
Other:
	Federal tax rate	25%
	Self-employment tax rate	15.30%
	State tax rate	5%

Assignment:

1.

Develop a completed balance sheet, and completed statement of deferred taxes (including the Valuation Equity report). Reference line items above on the B/S, DT, and VE reports using the item letters (a few examples are completed for you). (80 points)

Ive included a blank template in the Homework 1 folder along with the assignment. Note that some calculations/subtotals are already built in to the template (these cells are shaded in gray), but you should double-check each of them to ensure their accuracy.

2.

Briefly explain why deferred taxes are included on the B/S. (10 points)

3.

Briefly explain/define Valuation Equity and its potential sources. (10 points)

4.

Extra Credit: For each unused line item above, provide a brief description of why it was NOT used on the 12/31/13 Balance Statement (0.5 points each)

Balance Sheet for lini Tap - HW 1 As ofDecember 31, 2013 ASSETS 2013 LIABILITIES AND OWNER EQUITY 2013 CURRENT ASSETS CURRENT LIABILITIES Cash Savings & short-term deposits Marketable securities (at market) 30,000 a. Accounts payable Notes payable within 1 year Current portion of all term debt Accrued interest Accrued expenses 31,000 Supplies and other Raw Inputs Intermediate goods Completed Goods Accrued taxes Accrued business expenses Other accrued items Current portion-deferred taxes Other current liabilities business Other current liabilities personal Cash investment in work-in-progress Prepaid expenses Other current assets business Other current assets - personal TOTAL CURRENT ASSETS 30,000 TOTAL CURRENT LIABILITIES 31,000 NONCURRENT ASSETS NONCURRENT LIABILITIES Intermediate assets (at market) Machinery & equipment (at market) Investments in capital leased assets Investments In cooperatives Investments in other business entities Noncurrent portion of term business debt: 240,000 b Non-real estate debt Notes with original maturity less than 10 years Notes with original maturity greater than 10 years Real estate debt Notes with original maturity less than 10 years Notes with original maturity greater than 10 years Cash value of insurance policies Long-term financial assets & nonmarketable securities Business real estate (at market) Noncurrent portion-deferred taxes Other noncurrent liabilities business Other noncurrent liabilities - personal Land Buildings Other noncurrent assets -business (at market) Other noncurrent assets-personal (at market) TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES OWNER EQUITY TOTAL NONCURRENT ASSETS 240,000 31,000 Contributed capital Retained earnings Valuation equity 75,000 x