Question #1 Upon returning from a trip to Australia.... sisters Lara and Kara op
ID: 2492924 • Letter: Q
Question
Question #1 Upon returning from a trip to Australia.... sisters Lara and Kara opened up a Green Tea House, which has a Tea room as well as a Catering department, serving Private and Corporate parties. The following are the events of the first month-January of operation:
1. The initial capital, Lara and Kara each contributed $5,000 from their own savings and, in return, each received half of the shares of the business.
2. They applied and received a Bank loan of $20,000.
3. They spent $25,000 on Kitchen Equipment, utensils, furniture’s, etc. The equipment, utensils, and furniture should last for 10 years.
4. The Cash Sales from the tea room were $4000.
5. Catering services totaled $4,200 were provided on credit. Catering customers were given 30 days credit period. The invoices for the $4,200 have been sent to the customers but the payments were not yet been received.
6. The month's rent of $500 has been paid.
7. The Wages of the chef and two servers totaled $1,500, all have been paid.
8. The utilities for the month totaled $100. This amount has not been paid by the end of the month.
9. $3,000 of Supplies were purchased and paid during the first month. However, there were still $2,000 of Supplies and material left on hand at the end of the month.
Required: 1. Prepare an Income Statement for the first month-January, for Green Tea House. Please list all the Revenue and Expenses.
2. Prepare a Schedule of Cash transaction for the first month-January, for Japanese Tea House. Please list all the collections and payments.
3. Prepare a Balance Sheet for Japanese Tea House as at the end of January. Please list all the Assets, Liabilities, and Shareholders’ Equity.
Explanation / Answer
CASH FLOW
INCOME STATEMENT Cash sales 4000 Catering Services 4200 Rent -500 Wages -1500 Utilishes -100 Supplies consumed -1000 Net income 5100