Question
Beans and Aroma (B&A) , a local coffee shop, reports the following financing and investing activities as of June 30, 2021: The f ounder started
Beans and Aroma (B&A), a local coffee shop, reports the following financing and investing activities as of June 30, 2021:
The founder started the business with an equity capital contribution of $80,000. In addition, she received a bank loan of$30,000 for 10-years, at an interest rate of 12% per year. The rent for the shop is $2,300 per month. The shop spent $50,000 to purchase coffee-making equipment and $30,000 to obtain inventories. Accounts payable totaled $30,000, stemming entirely from the inventory purchase. The company maintains a checking account having a balance of $60,000 (initial cash balance). Based on the above information, prepare B&As initial balance sheet as of June 30.
Now, prepare B&As income statement as of December 31 using the following information:
Price of each cup of coffee is $5 and the shop sold a total of 36,000 cups of coffee in the first 6 months. The company realized promotional expenses (billboards and other print media) of $25,000 and administrative expenses (owners salary & benefits) of $18,000. Total rent for the shop was $13,800 in the past six months. Depreciation on the $50,000 equipment over six months totaled $5,000. The company reported a total of $110,000 in cost of goods sold (COGS).
Now, lets say, the shop provided several catering services for credit sales, which totaled $30,000. Value of inventories as of December 31 is $45,000. Credit purchase to produce coffee and other snacks and desserts next year has a total of $35,500.Balance on cash and marketable securities has reached $48,000 as of December 31.
Prepare B&As balance sheet as well as statement of cash flow as of December 31. Conduct a break-even analysis and compute the firms survival revenue.
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