In early December, Alice and Bob decided to open the Sample Cafe with $15,000 of
ID: 2426637 • Letter: I
Question
In early December, Alice and Bob decided to open the Sample Cafe with $15,000 of their own money and $20,000 borrowed from a friend. They have spent $12,000 on equipment and furniture, and purchased $3,000 worth of inventory. Having put down a $2,500 deposit for a location on Main St., they will pay the first month's rent when they open their doors on January 1st. Create a balance sheet showing the financial position of the Sample Cafe as of December 31st. The Sample Cafe nearly broke even in the first month of business. Below is a summary of revenue and expenses for January. Starting with the balance sheet from December 31st, use the results to create an updated balance sheet for January 31st.Explanation / Answer
2. Balance sheet as on December 31st (in $)
Working Note 1.
Cash account (in $)
3. Updated balance sheet as on january 31st(in $)
Capital 15000
Net Income(700)**
Working Note 1. Cash Balance :opening+revenue-purchases-expenses=17500+30000-1300*-27000=19200(in $)
*Working Note 2. Cost of goods sold=opening+purchases-Closing inventory
3500=3000+purchases-800
Purchases=1300
**$700 includes depreciation of amount $200