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for the number for remaining Raw Materials please simply use an Ending Balance of USD30k for Raw Materials. Mira closes her raw materials with USD 30K, with 40k of raw materials moving to Work in Progress (WIP) replacing any information in the case with this.
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Davis decided to take advantage of her friend's offer of help and provided Smith with the following information on the events that occurred from January 1, 2019 to June 30, 2019: 1. January 1, 2019: 8,000 shares issued for $25 each. 2,000 shares issued for a five-year license of the recipe, which would begin on July 1, 2019. 2. January 12, 2019: Paid $7,000 cash for legal fees to incorporate the business. 3. June 1, 2019: Purchased Bourbon barrels to be used in production, which was scheduled to start on July 1, for $5,000. 4. June 9, 2019: Purchased 5,000 pounds of ingredients (hops, barley, malt, and yeast) for $20,000. 5. June 30, 2019: Paid $75,000 for brewing equipment (including delivery and installation of fermenter, mixing tank, pumps, etc.) Over the next six months, Davis had ramped up operations and brewed, aged, and sold several batches. She provided Smith with the following information on events that occurred from July 1, 2019 to December 31, 2019: 6. Purchased an additional 10,000 pounds of ingredients from the supplier for $50,000, $5,000 of which was unpaid at year-end. 7. August 1, 2019: Paid $18,000 cash for a six-month web advertisement campaign, targeted to beer and Bourbon drinkers. 8. October 1, 2019: Purchased office furniture for $8,000 cash. 9. December 1, 2019: Borrowed $15,000 on a line of credit at an annual interest rate of 8%. No interest had been paid for the month of December. 10. Expended $34,000 for direct manufacturing labor and on manufacturing-related overhead (rent, utilities, supervisory labor). The company spent another $23,000 on general and administrative costs. 11. 25% (or 3,750 pounds) of the ingredients were remaining. However, all of the beer had been sold and there was no beer in-process. 12. Sold $145,000 of beer to regional bottlers, with $45,000 still uncollected. She anticipated the brewing equipment would last for 10 years and the office furniture for four years, at which point they would be worthless. The Bourbon barrels were expected to last for two years and would then be discarded. The recipe had been very popular, and a rival brewery offered her $75,000 for a five-year license. However, Davis had no intention to sell the license. Churchill Downs had placed a firm order for $50,000 of beer for the 2020 Kentucky Derby in May. Although she had not taken a salary, Davis knew that she could have earned around $75,000 at a competitor microbrewer during the year. She planned to transition to full-time CEO at the company beginning January 2020. However, because it was cash constrained, several investors had suggested she take compensation in the form of stock instead of cash. Mira was unsure about how she should think about these two options. Work in Intangible Accounts Receivable S, Materials Inventory Finished Goods Inventory Process Inventory Prepaid Expenses Accounts Payable Accrued Expenses Retained Earnings Income Statement + + + + + + PPE, net + - Bank debt + + + + net 50000 Capital 250000 - 7000 Startup costs Cash 200000 -7000 -5000 - 20000 - 75000 5000 200001 750001 8000 -8000 15000 15000 Date Jan. 1 Jan. 12 Jun. 1 Jun. 9 Jun. 30 Aug. 1 Oct. 1 Dec. 1 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Transaction Issue shares Legal fees Purchase barrels Purchase materials Purchase equipment Pay advt in advance Purchase furniture Loan Purchase materials Mfg costs SG&A costs Depn barrels Depn equipt Depn furn. Materials on hand WIP completed Cost of sales Sales 34000 -34000 -23000 -23000 SG&A -500 -500 SG&A Dec. 31 Close I/S Davis decided to take advantage of her friend's offer of help and provided Smith with the following information on the events that occurred from January 1, 2019 to June 30, 2019: 1. January 1, 2019: 8,000 shares issued for $25 each. 2,000 shares issued for a five-year license of the recipe, which would begin on July 1, 2019. 2. January 12, 2019: Paid $7,000 cash for legal fees to incorporate the business. 3. June 1, 2019: Purchased Bourbon barrels to be used in production, which was scheduled to start on July 1, for $5,000. 4. June 9, 2019: Purchased 5,000 pounds of ingredients (hops, barley, malt, and yeast) for $20,000. 5. June 30, 2019: Paid $75,000 for brewing equipment (including delivery and installation of fermenter, mixing tank, pumps, etc.) Over the next six months, Davis had ramped up operations and brewed, aged, and sold several batches. She provided Smith with the following information on events that occurred from July 1, 2019 to December 31, 2019: 6. Purchased an additional 10,000 pounds of ingredients from the supplier for $50,000, $5,000 of which was unpaid at year-end. 7. August 1, 2019: Paid $18,000 cash for a six-month web advertisement campaign, targeted to beer and Bourbon drinkers. 8. October 1, 2019: Purchased office furniture for $8,000 cash. 9. December 1, 2019: Borrowed $15,000 on a line of credit at an annual interest rate of 8%. No interest had been paid for the month of December. 10. Expended $34,000 for direct manufacturing labor and on manufacturing-related overhead (rent, utilities, supervisory labor). The company spent another $23,000 on general and administrative costs. 11. 25% (or 3,750 pounds) of the ingredients were remaining. However, all of the beer had been sold and there was no beer in-process. 12. Sold $145,000 of beer to regional bottlers, with $45,000 still uncollected. She anticipated the brewing equipment would last for 10 years and the office furniture for four years, at which point they would be worthless. The Bourbon barrels were expected to last for two years and would then be discarded. The recipe had been very popular, and a rival brewery offered her $75,000 for a five-year license. However, Davis had no intention to sell the license. Churchill Downs had placed a firm order for $50,000 of beer for the 2020 Kentucky Derby in May. Although she had not taken a salary, Davis knew that she could have earned around $75,000 at a competitor microbrewer during the year. She planned to transition to full-time CEO at the company beginning January 2020. However, because it was cash constrained, several investors had suggested she take compensation in the form of stock instead of cash. Mira was unsure about how she should think about these two options. Work in Intangible Accounts Receivable S, Materials Inventory Finished Goods Inventory Process Inventory Prepaid Expenses Accounts Payable Accrued Expenses Retained Earnings Income Statement + + + + + + PPE, net + - Bank debt + + + + net 50000 Capital 250000 - 7000 Startup costs Cash 200000 -7000 -5000 - 20000 - 75000 5000 200001 750001 8000 -8000 15000 15000 Date Jan. 1 Jan. 12 Jun. 1 Jun. 9 Jun. 30 Aug. 1 Oct. 1 Dec. 1 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Transaction Issue shares Legal fees Purchase barrels Purchase materials Purchase equipment Pay advt in advance Purchase furniture Loan Purchase materials Mfg costs SG&A costs Depn barrels Depn equipt Depn furn. Materials on hand WIP completed Cost of sales Sales 34000 -34000 -23000 -23000 SG&A -500 -500 SG&A Dec. 31 Close I/S
