The owner of the Gatti Motel and Eatery has asked you to prepare an income statement and balance sheet based on the following:

1. Accounts receivable = $15,000 2. Accounts payable = $20,000 3. Current assets consist of cash, accounts receivable, and inventory 4. Current liabilities consist of only accounts payable 5. Current ratio = 1.2 to 1 6. Acid-test ratio = .8 to 1 7. Accounts receivable turnover = 25 times (all sales are credit sales) 8. Food cost % = 38.5%

9. Beverage cost % = 20%

10. Property and equipment turnover = 1 time 11. Depreciation expense = 10% of book value at year-end 12. Long-term debt = 7 times accounts payable 13. Interest rate = 10%

14, Tax rate = 25%

15. Average room rate = $30.00 16. Average food check = $5.00 17. Size of motel = 30 rooms 18. Occupancy % = 75%

19. Number of food checks = 20,000

“Undistributed operating expenses” = 25% of total revenues Liabilities consist of accounts payable and long-term debt Food labor and other cost % = 30%
Beverage labor and other cost % = 20%
Rooms labor and other cost % = 40%
Total sales consist of rooms, food, and beverage sales Assume the balance sheet at the beginning of the year is the same as at the end of the year.