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You earn some money to finance your education by starting a business. You begin business on January 1, 2017, and run the business for the next 12 months.

***Number of hours expected to work: 513***

**Budget Assumptions**

1. Before the business begins, you will take $5,000 cash from your savings account to invest in the business. You will protect yourself by organizing as a corporation, with yourself as the only stockholder.

2. Equipment cost $4,800. Your parents lend the business $4,800 cash so that the business can pay for the equipment and software. The business plans to repay your parents on January 31, 2018. No interest but require you to sign a promissory note.

Beginning balance sheet

Arachne, Inc. Balance Sheet January 1, 2017
Assets
Current Assets
Cash	$5,000
Long-term Assets
Equipment	4,800
Less Accumulated Depreciation	0
	4,800
Total Assets	$9,800
Liabilities and Stockholders Equity
Current Liabilities	$0
Long-term Liabilities
Note Payable	4,800
Total Liabilities	$4,800
Stockholders Equity
Common Stock	$5,000
Retained Earnings	0
Total Liabilities	$5,000
Total Liabilities and Stockholders Equity	$9,800

3. Starting January 1, 2017, the business will charge $50 per hour for design work and bill clients as each job is completed. You expect that by December 31, 2017, the end of the fiscal year, 80% of clients will have paid the business in cash. You expect that the rest will pay by January 31, 2018.

4. The business hires an assistant to help with extra work. The assistant will earn $18 per hour and work exactly the same hours that you work. The assistant will be paid for each month's work on the fifth day of the month following the month when the work is done. Treat the assistant as an independent contractor. This means that you do not have to worry about withholding or matching payroll taxes. Assume that hours worked in December 2017 are expected to total 10% (round to nearest whole hour) of the total hours for the year.

5. Purchase of office supplies for cash of $2,500 in January 2017

6. On February 1, the business will pay cash of $2,160 for a one-year liability insurance policy.

7. Business will buy $450 of newspaper advertising each month. All payments for advertising costs will be made in the following month.

8. Dividend of $3,000 will be declared and paid before year-end.

Question:

Fill in the Budgeted Balance Sheet and answer the following question

Assets:
Current Assets (List in order of liquidity)
Total Current Assets
Long-term Assets
Total Long-term Assets
Total Assets
Liabilities:
Current Liabilities
Total Current Liabilities
Total Liabilities
Shareholder's equity:
Total Shareholder's Equity
Total Liabilities and Shareholder's Equity
1. Will you be able to repay your parents for the computer and software early on January 1, 2018?
2. Will you be able to repay your parents for the computer and software on the due date of January 31, 2018?

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