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KERNS CONSTRUCTION AND PROPERTY MGMNT CORPORATION <br />NO 11S TO FINANCIAL STA 1 EMENTS <br />December 31, 2014 <br />NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) <br />The Company's financial instruments include cash, contract receivables, other assets and <br />accounts payable. The Company's value of these financial instruments approximates fair value <br />due to their short-term nature <br />Financial instruments that potentially subject the Company to credit risk include cash and <br />contract receivables. The Company maintains its demand in commercial banks with Federal <br />Deposit Insurance Corporation limits. The Company may apply a mechanic's lien against any <br />unpaid contract receivables in accordance with state law. <br />Equipment is stated at cost. Depreciation is computed on accelerated methods over five years. <br />NOTE 3- CONTRACT RECEIVABLES <br />Contract receivables consist of the following: <br />Contract receivables $ 261,125 <br />The company has an allowance for doubtful accounts in the amount of $0 at December 31, 2014 <br />The company considers contract receivables collectible, <br />NOTE 4- ACCOUNTS PAYABLE <br />Accounts payable consists of the following <br />Accounts Payable 1,745 <br />Subcontractor Retention Payable 311,891 <br />$ 313,636 <br />NOTE 5- LINE OF CREDIT <br />The Company has an $ 85,000 bank line of credit. The line bears interest at prime plus 1% per <br />annum. It is secured by all Company assets and personal guarantees by the stockholders of the <br />Company. The Company is in compliance with certain financial covenants imposed by the line <br />of credit agreement. At December 31, 2014 the outstanding balance was $ 40,112. <br />NOTE 6- NOTES PAYABLE — SHAREHOLDER <br />The Company has a note payable to shareholders of $13,239 at December 31, 2014 The note is <br />considered due upon demand and recorded as a current liability <br />- 6 - <br />LI <br />