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    FADM Assignment Solved

    Uploaded by

    Anujain Jain
    Cool Breeze Inc. (CBI) recorded various transactions in January 2021 related to starting a new restaurant business. CBI raised $100,000 from stockholders and $40,000 from a note payable. CBI purchased inventory, equipment, supplies and paid rent and wages. CBI earned revenue from meals and catering but also incurred expenses. By the end of the month, CBI's accounting records showed assets of $284,550, liabilities of $71,068, and equity of $100,000, resulting in total assets equaling total liabilities plus equity.

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    FADM Assignment Solved

    Uploaded by

    Anujain Jain
    64 views12 pages
    Cool Breeze Inc. (CBI) recorded various transactions in January 2021 related to starting a new restaurant business. CBI raised $100,000 from stockholders and $40,000 from a note payable. CBI purchased inventory, equipment, supplies and paid rent and wages. CBI earned revenue from meals and catering but also incurred expenses. By the end of the month, CBI's accounting records showed assets of $284,550, liabilities of $71,068, and equity of $100,000, resulting in total assets equaling total liabilities plus equity.

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    Cool Breeze Inc. (CBI) recorded various transactions in January 2021 related to starting a new restaurant business. CBI raised $100,000 from stockholders and $40,000 from a note payable. CBI purchased inventory, equipment, supplies and paid rent and wages. CBI earned revenue from meals and catering but also incurred expenses. By the end of the month, CBI's accounting records showed assets of $284,550, liabilities of $71,068, and equity of $100,000, resulting in total assets equaling total liabilities plus equity.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    64 views12 pages

    FADM Assignment Solved

    Uploaded by

    Anujain Jain
    Cool Breeze Inc. (CBI) recorded various transactions in January 2021 related to starting a new restaurant business. CBI raised $100,000 from stockholders and $40,000 from a note payable. CBI purchased inventory, equipment, supplies and paid rent and wages. CBI earned revenue from meals and catering but also incurred expenses. By the end of the month, CBI's accounting records showed assets of $284,550, liabilities of $71,068, and equity of $100,000, resulting in total assets equaling total liabilities plus equity.

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    FADM 2021 Assignment #1 COOL BREEZE INC.

    (CBI)

    Cash
    Account Balances 1 January, 2021 0

    Part 1: Record Transactions


    Cool Breeze owners invested Rs. 100,000 and CBI issued common stock in that
    1 amount. 100,000
    2 The restaurant raised Rs. 40,000 cash from a note payable. 40,000
    On 2 Jan, CBI paid rent in advance for the first five months of 2021. Cash paid for
    3 rent amounted to Rs. 15,000. (15,000)
    4 CBI purchased food supplies (inventory) of Rs. 80,000 on account.
    5 CBI bought restaurant equipment for Rs. 91,200 and paid cash. (91,200)
    CBI received cash of Rs. 196,000 from customers for restaurant meals during the
    6 month. 196,000
    CBI earned revenue of Rs. 36,000 from catering activities performed during the
    month for two large customers. To encourage future business from these
    7 customers, CBI agreed the customers could pay within 45 days.
    CBI received cash of Rs. 15,000 from sale of gift cards. All gift cards have unlimited
    8 expiry. 15,000
    9 CBI paid Rs. 40,000 cash as wages for the month. (40,000)

    CBI paid Rs. 6,000 cash for advertising in the local newspaper. The agreement with
    the newspaper is to run advertisements from 1 February through 31 March, 2021.
    10 (6,000)
    Utilities expenses for January were Rs. 500, which the company paid in cash at
    11 month end. (500)
    12 CBI collected Rs. 20,000 cash in January, from the two major credit customers. 20,000
    13 CBI paid Rs. 50,000 cash for the food supplies purchased on credit. (50,000)
    14 CBI paid Rs. 10,000 cash as a dividend to the common stockholders. (10,000)

    Part 2: Record Accounting Adjustments


    15 On 31 January, Rs. 7,000 worth of gift cards had not been redeemed.
    By the end of January, employees had earned Rs. 6,400 in wages that will not be
    16 paid until February.
    A physical count of the food supplies revealed inventory of Rs. 2,000 on hand at
    17 month end.
    The restaurant equipment is expected to last eight years and have no salvage value
    18 at the end of that time.
    The Rs. 40,000 note requires that the principal and interest be paid after five years
    and carries an annual rate of interest of 6%. Interest is to be paid in cash on the
    anniversary date (1 January) each year.
    19
    Income taxes are payable at the rate of 35% on income before taxes. Taxes are due
    20 at the end of the fiscal quarter.
    Other accounting adjustments as required

    Account Balances 31 January, 2021 158,300

    Balance Sheet Equation


    Accounts Prepaid Equipment at Accumulated Accounts Unearned
    Receivable Inventory Expenses cost Depreciation Payable Revenue
    0 0 0 0 0 0 0

    15,000
    80,000 80,000
    91,200

    36,000

    15,000

    6,000

    (20,000)
    (50,000)

    (8,000)

    (78,000)

    950
    (3,000)
    16,000 2,000 18,000 91,200 950 30,000 7,000

    A= 284,550
    Interest 6% Note
    Payable Wages Payable Taxes Payable Payable Common Stock Net Earnings
    0 0 0 0 0 0

    100,000 -
    40,000 -

    -
    -
    -

    196,000

    36,000

    -
    (40,000)

    (500)
    -
    -

    -
    8,000

    6,400 (6,400)

    (78,000)

    (950)

    200 (200)
    39,883 (39,883)

    (3,000)
    200 6,400 39,883 40,000 100,000 71,068

    L+E= 284,550
    Other
    Cost of Goods Operating Depreciation
    Dividends Revenue Sold Wages Expense Expenses Expense
    0 0 0 0 0

    196,000

    36,000

    40,000

    500

    10,000

    8,000

    6,400

    78,000

    950
    3,000
    10,000 240,000 78,000 46,400 3,500 950
    Interest Income Tax Net
    Expense Expense Income
    0 0

    -
    -

    -
    -
    -

    196,000

    36,000

    -
    (40,000)

    (500)
    -
    -
    -

    -
    8,000

    (6,400)

    (78,000)

    (950)

    200 (200)
    39,883 (39,883)

    (3,000)
    200 39,883 71,068
    Cool Breeze Inc. Cool Breeze Inc.
    Income statement Balance Sheet

    Revenue Assets
    COGS Current Cash
    Gross Profit Accounts Receivable
    Inventory
    Depreciation Expense Non-CurrenPPE
    Wages Expense Accumulated Depriciation
    Other Operating Expenses PPE,net
    EBIT
    Interest Expense Liabilities
    Earnings before Tax Current Accounts Payable
    Tax Expense Unearned Revenue
    Net Income Interest Payable
    Wages Payable
    Taxes Payable
    Non-Curren6% Note Payable

    Shareholder's Equity
    Common Stock
    Retained Earnings
    Dividends

    L+SE
    ze Inc.
    Sheet

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