Charlie Driver has $35,000 savedand has decided to attend college, taking courses in marketing. To help pay his tuition and living expenses, he contracted with a mobile cateringcompany as an independent driver. Charlie will run his mobile catering business on a cash basis; he has named his business Charlies Convenient Catering, or the 3C Company for short. He opened a company bank account with $35,000. He bought a used, fully equipped mobile catering company truck for $29,000, and operated from January 4 to December 31, 20x5. Charlie Driver was pleased with the results of 3C Companys operation in year 20x5, especially since he only operated part-time basis. In fact, he found the catering business to be not only profitable but he also an enjoyable challenge. He decided to continue the 3C Company in year 2006, finish his hospitality and marketing education, and search forasuitable restaurant to acquire and operate. Near the end of year 20x6, Charlie found an 84-seat restaurant that had been closed for several months. It was the type of facility he had been looking for. After locating the owner, he reached an agreement tolease the restaurant for five years beginning January 20x7. The lease set the first-yearrental cost at $24,000 and stipulated a 10% yearly rental increase in each of the remaining four years of the five-year lease. In addition, the owner agreed to allow Charlie to trade in the old equipment and furnishings for whatever he can get for them and to purchase new equipment and furnishing.The equipment and furnishing were traded in on new equipment with a net cost of $71,524 and new furnishing with a net cost of $53,596. The new equipment was estimated to have a 12 -year life with a residual value of $6,500. The new furnishings had an estimated 8-year life and residual value of $2,620.Charlie realized that for purposes and other considerations, he should incorporate a new company as Charlies Classic Cuisine Corporation. Hesimplifiedthis name to the 4C company. With cash he had saved from operating the 3C Company and from the sale of the truck, Charlie purchased $50,000 of the 4C Companys $2.00 par value common stock. Charlie used his reputation and good business record over the past two years to obtain a corporate loan from his bank for $200,000. The loan was to be repaid over the next five years in monthly installments of principal and interest. Although Charlie hired a bookkeeper, he has asked your team, a personal friend, to prepare the 4C Companys year-end financial statements and to discuss the results his first year of operations with your team. Your teamagreed to prepare the year-end statements from a year-ending unadjusted trail balance of accounts provided to your team.To make the necessary adjustments, you are given the following information:a.Inventory figures in the unadjusted trial are for the beginning of Year 20x7(See the uploaded excel file 4C Unadjusted Trial Balance). The December 31, 20x7, end-year inventories are $5,915 for food and $2,211 for beverages.b.Accrued payroll of $2,215 must be recognized as of December 31, 20x7. c.Depreciation on equipment and furnishings using straight-lined method must be recognized.d.The bank loan principal to be paid in Year 20x8 is $38,260

.The guest count (covers) for the 4C restaurant for the year was 66,612. Determine the overall average check (sales revenue) for food and beverages. In your opinion, does the average check for food and beverages appear reasonable for a budget conscious, family-type table service restaurant?Explain why. 4.Given the choice, would it be better to have a higher or lower percentage of beverage sales revenue compared to the food sales revenue?5.How does cost of sales for food, beverages, andtotal cost of salescompare to the ranges provided for a restaurant of this type(Table 1on page 2)? 6.With reference to the 4C Companys unadjusted trial balance, balance sheet, and income statement for the year ending December 31, 20x7that yourgrouppreparedI #1,calculate each of the following. (This is the first year of 4C Companys operation. When averages are called for but only beginning numbers are available, use the ending numbers shown in thefinancial statements). a.Working capitalb.Current Ratioc.Quick Ratiod.Credit card receivable average collection period (Credit card sales revenue is 60% of total sales revenue.)e.Accounts receivable average collection period (accounts receivable is 10% of total sales revenue.) f.Net Return on assets g.Net income to total sales revenue ratio h.Return on stockholders equity i.Food inventory turnover ratio j.Beverage inventory turnover ratio7.Prepare a short discussion of each calculated ratio, which you believe may be unsatisfactory, and explain why. a.Quick Ratiob.Credit card receivables turnover ratio c.Account receivable turnover ratio d.Food inventory turnover ratio e.Beverage inventory turnover ratio f.More which you believe may be unsatisfactory8.It appears the 4C has a good liquid cash position, and Mr. Driver is considering using $20,000 of 4C cash to redeem some of his shares of common stock before the final financial statements of current year are prepared. He asks for your opinion. Recalculated any of the proceeding ratios that will be affected by the repurchase of the stock and discuss the effects if the stock repurchases the stock and discuss the effects if the repurchase of the stock and discuss the effects if the stock repurchase id made.

"4C Company Unadjusted Trial Balance December 31, 2007"
Accounts	Debit	Credit
Cash	$36,218
Credit card receivbles	13,683
Accounts Receivables	3,421
Inventories, Food	6,128
Inventories, Beverages	3,207
PrePaid insurance	2,136
Equipment	171,524
Furnishings	53,596
Accounts Payable		8,819
Bank Loan Payable		163,518
Common Stock		50,000
Sales Revenue, Food Operartions		458,602
Sales Revenue, Beverage Operartions		180,509
Purchases, food (net)	181,110
Purchases, Bevarages (net)	38,307
Salaies and wages expense	221,328
Laundry expense	16,609
Kitchen Fuel Expense	7,007
China and Tableware Expense	12,214
Glassware expense	1,605
Contract cleaning Expense	5,906
Lisenseces Expense	3,205
Misc. operating expense	4,101
Administravtive- general expenses	15,432
Marketing expenses	6,917
Utilities expenives	7,918
Insurance Expense	1,895
Rental Expense	24,000
Interest Expense	23,981
Unadjusted Trial Balance Totals	861,448	861,448

Income Statement

Sales Revenue

Food Operations

Beverage Operations

Total Sales Revenue

Cost of Sales, Food

Beginning Inventory

Purchases

Less: Ending Inventory

Cost of Sales, Beverages

Beginning Inventory

Purchases

Less; Ending Inventory

Cot of Sales Beverages

Total Cost of Sales

Gross Margin

Operating Expenses

Salaries and wages expenses

Laundry Expense

Kitchen Fuel Expense

China and tableware Expense

Glassware Expense

Contract Cleaning expense

Liscenses Expense

Other Operating Expense

Administrative and general Expenses

Marketing Expenses

Utilities Expenses

Insurance Expense

Rent Expense

Interest Expense

Deprecition Expense

Total Operating Expenses

Operating Income

Income Tax expense

Net Income

a.Working capital

b.Current and quick ratio

c.More which you believe are necessary