Question

Required:

1. Correct the recorded activity for Android for Life during July on the attached spreadsheet

2. Correct the balance sheet and income statement for Android for Life in July 2015 on the attached spreadsheet.

3. Is the large decline in cash a concern?

Android for Life Inc.

On July 1, 2015, Andy incorporated her business under the name Android for Life, Inc. Listed below are various transactions that occurred during the remainder of the year:

(a) On July 1, Andy purchased all of Android for Life common stock for $100,000 cash.

(b) On July 1, Android for Life paid $3,000 to an attorney to prepare and file incorporation documents with the State of Texas.

(c) On July 2, Android for Life borrowed $100,000 from a local bank. The bank note required payment of principal in four annual installments of $25,000 beginning on July 1, 2016. In addition, the note specified interest payments of 6%, with the first payment due on July 1, 2016.

(d) On July 3, Android for Life signed a five-year lease on a building to be used as the veterinary clinic. The lease required a payment of $10,000 per month , payable on the first day of each month. Android for Life paid the amount for July on the date the lease was signed.

(e) On July 5, Android for Life paid $150,000 for medical equipment, office furniture, and other equipment.

(f) On July 6, Android for Life purchased various inventory items for $8,500 cash.

(g) Also on July 6, Android for Life purchased $500 worth of office supplies for cash.

(h) On July 28, Android for Life paid employees wages of $8,000 (which included Andy’s salary of $6,000).

(i) During July, Android for Life received $30,000 from clients for office visits and sales of merchandise (food, clothes, etc.).

A review of Android for Life records at July 31, 2015, revealed the following:

(j) Clients still owed Android for Life $3,500 for services performed during July but not yet billed. These amounts are expected to be billed and collected in August.

(k) At the end of July, a physical count of inventory revealed that $1,000 of inventory was still on-hand.

(l) At the end of July, a physical count of office supplies revealed that $100 of supplies were still on-hand.

(m) Depreciation on the equipment for July was estimated to be $1,250.

(n) Interest needs to be recorded on the note payable.

		Assets								Liabilities			Stockholders' Equity
			Accounts		Office	Property, Plant	Intangible	Accumulated		Notes	Interest		Common	Retained
Transaction		Cash	Receivable	Inventory	Supplies	& Equipment	Assets	Depreciation	=	Payable	Payable		Stock	Earnings
purchase of Common Stock		(100,000)											(100,000)
Payment for Articles of Incorporation		(3,000)					3,000
Note / Loan (interest expense on income statement?)		100,000								100,000
Long-term Lease (show on income statement $10k?)		(10,000)												(10,000)
Long-term Equipment		(150,000)				150,000
Inventory Items		(8,500)		8,500
Office Supplies		(500)			500
Wages		(8,000)												(8,000)
Office Visits/ Merchandise		30,000												30,000
Services Performed			3,500											3,500
Inventory Used (income statement expense?)		7,500		(7,500)
Office Supplies Used (income statement expense?)					(400)									(400)
Depreciation on Equipment (income statement expense?)								(1,250)						(1,250)
Interest Expense (income statement expense?)											6,000			(6,000)
Totals		(142,500)	3,500	1,000	100	150,000	3,000	(1,250)		100,000	6,000		(100,000)	7,850

Android Inc.
Income Statement
For the month ended July 31st, 2015
Revenues
Sales and Revenues		33,500
Less: Cost of goods Sold		(7,500)
Gross Profit		26,000
Expenses
Organizational Expenses	3,000
Salaries Expense	8,000
Office Supplies Expense	400
Depreciation Expense	1,250
Interest Expense	500
TOTAL EXPENSE		13,150
NET INCOME		12,850
Android Inc.
Balance Sheet
As at July 31st, 2015
Assets:
Current Assets
Cash	60,000
Accounts Receivable	3,500
Inventory	1,000
Office Supplies	100
Total Current Assets		64,600
Plant Property and Equipment
Plant Property and Equipment	150,000
Less: Accumulated Depreciation	(1,250)	148,750
TOTAL ASSETS		213,350
LIABILITIES
Notes Paybles	100,000
Interest Payale	500
TOTAL LIABILITIES		100,500
Shareholder's Equity
Common Stock	100,000
Retained Earnings	12,850
TOTAL Shareholder's Equity		112,850
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY		213,350