Anne Spider

Anne Spier has prepared baked goods for resale since 1991. She started a baking business in her home and has been operating in a rented building with a storefront since 1996. Spier incorporated the business as MAS Inc. on January 1, 2013, with an initial share issue of 1,000 shares of common shares for $2,500. Anne Spier is the principal shareholder of MAS Inc. Sales have increased 30% annually since operations began at the present location, and additional equipment is needed to accommodate expected continued growth. Spier wishes to purchase some additional baking equipment and to finance the equipment through a long-term note from a commercial bank. Kelowna Bank & Trust has asked Spier to submit an income statement for MAS Inc. for the first five months of 2013 and a balance sheet as of May 31, 2013. Spier assembled the following information from the corporation’s cash basis records for use in preparing the financial statements requested by the bank.

1. The bank statement showed the following 2013 deposits through May 31.

Sales of common shares
$ 2,500
Cash sales
22,770
Rebates from purchases
130
Collections on credit sales
5,320
Bank loan proceeds 2,880

$33,600

2. The following amounts were disbursed through May 31, 2013:

Baking materials
$14,400
Rent
1,800
Salaries and wages
5,500
Maintenance
110
Utilities
4,000
Insurance premium
1,920
Equipment
3,000
Principal and interest payment on bank loan
312
Advertising 424

$31,466

3. Unpaid invoices at May 31, 2013, were as follows:

Baking materials
$256
Utillities 270

$526

4. Customer records showed uncollected sales of $4,226 at May 31, 2013.

5. Baking materials costing $1,840 were on hand at May 31, 2013. There were no materials in process or finished goods on hand at that date. No materials were on hand or in process and no finished goods were on hand at January 1, 2013.

6. The note evidencing the three-year bank loan is dated