Question 1
The opening balance sheet for the month ended April 1, 1994 has been prepared in the excel spreadsheet. As the data for the opening inventory and inventory in process is not provided, therefore, the current assets has been assumed as the balancing figure in the excel spreadsheet. The opening balance sheet is as follows:
OPENING BALANCE SHEET APRIL 1, 1994 |
|
Assets | |
Current Assets (Balancing fig.) |
32100 |
Non-Current Assets | |
Refrigerator, range & grill |
26000 |
Computer System |
12000 |
Food preparation equipments |
1200 |
Furniture & Fixtures |
2700 |
Capitalized improvements and renovations |
68000 |
TOTAL ASSETS |
142000 |
Liabilities & Equity | |
Current Liabilities | |
Outstanding Principle Repayment |
12000 |
Rent |
0 |
Long Term Liabilities | |
Loan |
120000 |
TOTAL LIABILITIES |
132000 |
Equity | |
Share Capital |
10000 |
TOTAL LIABILITIES & EQUITY |
142000 |
Question 2
The income statement, balance sheet and the cash flow statement for the nine months ending December 31, 1994 has been prepared in the excel spreadsheet. The depreciation has been apportioned for the nine months. As the rent is paid on a monthly basis therefore, there would be no rent payable shown on the balance sheet as the landlord would have 0 rent receivable. The financial statements for the nine months are shown below:
INCOME STATEMENT DECEMBER 31, 1994 |
|
Cash Revenue |
209000 |
Less: Cash Expenses |
51000 |
GROSS PROFITS |
158000 |
Less: Operating Expenses | |
Supply Costs |
4800 |
Utility Charges |
7000 |
Employee Wages |
42900 |
Rent Expense (6 months) |
8400 |
License Fee |
900 |
Insurance Expenses |
18000 |
Total Expenses |
82000 |
OPERATING PROFITS |
76000 |
Less: Interest Expense |
9000 |
OPERATING PROFITS |
67000 |
Less: Income Tax @ 15% |
10050 |
NET PROFITS |
65950 |
Less: Dividends |
25000 |
Retained Earnings |
40950 |
BALANCE SHEET DECEMBER 31, 1994 |
|
Assets | |
Current Assets | |
Accounts Receivables |
3000 |
Other assets (Balancing fig. including cash of 62875) |
95775 |
Non-Current Assets | |
Refrigerator, range & grill |
22100 |
Computer System |
10500 |
Food preparation equipments |
900 |
Furniture & Fixtures |
2025 |
Capitalized improvements and renovations |
57800 |
TOTAL ASSETS |
192100 |
Liabilities & Equity | |
Current Liabilities | |
Outstanding Principle Repayment |
12000 |
Rent Payable |
0 |
Tax Payable |
10050 |
Accounts Payables |
9000 |
Utility charges payable |
1000 |
Wages payable |
1100 |
Long Term Liabilities | |
Loan |
108000 |
TOTAL LIABILITIES |
141150 |
Equity | |
Share Capital |
10000 |
Retained Earnings |
40950 |
TOTAL LIABILITIES & EQUITY |
192100 |
CASH FLOW STATEMENT DECEMBER 31, 1994 |
|
Net Income |
65950 |
Add back: Depreciation |
16575 |
Increase in Ac. Receivables |
-3000 |
Increase in Ac. Payables |
9000 |
Increase in Tax payable |
10050 |
Dividend Paid |
-25000 |
Interest Paid |
-9000 |
Cash Flow from Operating Activities |
64575 |
Investing Activities | |
Capital Expenditures |
57800 |
Purchase of computer system |
12000 |
Purchase of furniture and fixtures |
2700 |
Purchase of Food equipments |
1200 |
Purchase of kitchen equipments |
26000 |
Cash Flow from Investing Activities |
-99700 |
Long Term Borrowings |
120000 |
Long term financing repayments |
-12000 |
Purchase of common Stock |
-10000 |
Cash Flow from Financing Activities |
98000 |
Net cash and cash equivalents |
62875 |
Opening Cash and Cash Equivalents | - |
Closing Cash and Cash Equivalents |
62875 |
Question 3
The financial statements for the 12 year ending December 31, 1995 are shown below:
Island Foods, Inc Case Solution
INCOME STATEMENT DECEMBER 31, 1995 |
|
Cash Revenue |
325000 |
Less: Cash Expenses |
93000 |
GROSS PROFITS |
232000 |
Less: Operating Expenses | |
Supply Costs |
6200 |
Utility Charges |
11000 |
Employee Wages |
74600 |
Rent Expense (12 months) |
16800 |
License Fee |
0 |
Insurance Expenses |
0 |
Total Expenses |
108600 |
OPERATING PROFITS |
123400 |
Less: Interest Expense |
8100 |
OPERATING PROFITS |
115300 |
Less: Income Tax @ 15% |
17295 |
NET PROFITS |
106105 |
Less: Dividends |
40000 |
Retained Earnings |
66105 |
BALANCE SHEET DECEMBER 31, 1995 |
|
Assets | |
Current Assets | |
Accounts Receivables |
5000 |
Other assets (Balancing fig. including cash of 143225) |
139575 |
Non-Current Assets | |
Referigerator, range & grill |
16900 |
Computer System |
8500 |
Food preparation equipments |
500 |
Furnitures& Fixtures |
1125 |
Capitalized improvements and renovations |
44200 |
TOTAL ASSETS |
215800 |
Liabilities & Equity | |
Current Liabilities | |
Outstanding Principle Repayment |
12000 |
Rent Payable |
0 |
Tax Payable |
17295 |
Accounts Payables |
12000 |
Utility charges payable |
1000 |
Wages payable |
1400 |
Long Term Liabilities | |
Loan |
96000 |
TOTAL LIABILITIES |
139695 |
Equity | |
Share Capital |
10000 |
Retained Earnings |
66105 |
TOTAL LIABILITIES & EQUITY |
215800 |
CASH FLOW STATEMENT DECEMBER 31, 1995 |
|
Net Income |
106105 |
Add back: Depreciation |
22100 |
Increase in Ac. Receivables |
2000 |
Increase in Ac. Payables |
3000 |
Increase in Tax payable |
7245 |
Dividend Paid |
-40000 |
Interest Paid |
-8100 |
Cash Flow from Operating Activities |
92350 |
Investing Activities |
0 |
Cash Flow from Investing Activities |
0 |
Long Term Borrowings |
0 |
Long term financing repayments |
-12000 |
Purchase of common Stock |
0 |
Cash Flow from Financing Activities |
-12000 |
Net cash and cash equivalents |
80350 |
Opening Cash and Cash Equivalents |
62875 |
Closing Cash and Cash Equivalents |
143225 |
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