Barley & Hops Company Was Formed in 2014

question 79

Essay

Barley & Hops Company was formed in 2014.During the year the company had the following events occur:
1.The company issued $100,000 in common shares for cash.
2.The company purchased equipment for $15,000,paying $5,000 down and signing a 1-year,8% note for the balance.
3.The company hired 4 employees.
4.The company had sales of $250,000.All sales were on account.
5.The company incurred the following expenses: rent: $2,000,salaries: $20,000,advertising $2,000 and utilities $4,000.All expenses were paid in cash.

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Definitions:

Mortgage Loan

A loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty.

Down Payment

An initial, upfront payment made towards the purchase of a high-value item, like real estate or a vehicle, typically representing a percentage of the total purchase price.

Statute of Frauds

A legal principle that requires certain types of contracts to be written in order to be enforceable.

Mortgage

A secured loan where property is used as collateral for borrowing money, usually for purchasing real estate.