After reviewing the May operating results, the owner realized that the company had a net loss mainly due to low sales volume and people not being aware of the existence of the company. This means that the company requires a series of marketing campaigns to get its name out there to as many people as possible. This led to the hiring of a marketing manager to lead future marketing campaigns. Her monthly salary is $10,000. The company also purchased two more pieces of equipment; a display unit for assortments of sweets and the juice machine for fresh fruits for $15,000 and $10,000 respectively. The purchases were not paid as of June 30. Please note that the previous purchase of machinery and furniture and fixtures was all paid off by the end of the month. The useful life is 3 years and 5 years respectively and the salvage value is deemed to be nil.

The owner also decided to take out a monthly salary of $15,000 to support her day-to-day living expenditures. The owner will take 50% of the net income as the annual bonus. The bonus will be calculated based on the net income before tax. After the bonus is calculated, the tax on the net income must be calculated.

The store requires some improvements in the following areas:

- Washroom : $10,000

- Kitchen: $5,000

- Flooring $12,000

The marketing manager came back with proposals as follows:

- Social media marketing: monthly fee of $1,000

- Loyalty program: customers can earn a point for each dollar spent at the store, and redeem 100 points towards the $1 purchase price.

Also, the company decided to partner with Uber Eats and Dashdoors for food delivery. The delivery cost is 30% of the sales amount.

The company had a total sales of $120,000. During the month, the company purchased $75,000 in inventory. The value of the month-end inventory was $50,000.

The company withdrew $35,000, and the bank did not send the month-end statement in time for book closing. As a result, the accountant had to accrue the estimated interest expense based on the month-end balance at the stated interest rate.

During the month, there was a minor incident where a customer slipped and fell. The customer claimed that the floor was wet but no sign was placed to warn the wet floor. The owner consulted with the external legal counsel and realized that the company does not have sufficient coverage for slip and fall accidents and was advised to settle the case with the customer for $5,000. The owner agreed and told the lawyer to proceed accordingly.

The requirements:

Please prepare the balance sheet as of June 30, 2022, the income statement, and the statement of cash flow for the one month-ending June 30, 2022.

Hint:

The following Chart of Accounts needs to be added to capture the new transactions listed above.

Account Name

Account #

Leasehold Improvement

1700

Accumulated Depreciation - Leasehold Improvement

1710

Contingent Liability (Provision)

2150

Marketing Expense

5200

Cost of Goods Sold - Delivery Charge

5100