HospitalityManagement Accounting

Assignment 1

Problem Solving:

ArtAngel operated a small seasonal lake marina, renting boats and selling snacks. He rents marina space for four months in Year 2018, from May 15 to September 15, for Php 48,000 per month. He started the current season with Php900,000 in the bank and paid the marina seasonal rent in advance. In May, he bought three new boats for cash at Php750,000 each and borrowed Php1,500 ,000 at 6 percent interest. The new boats are estimated to have a 10-season life and a residual (trade-in) value of Php150,000 each. Straight-line depreciation will be used. Purchase invoices show he paid Php447,480 cash for food and beverage inventory. One unpaid invoice for food in the amount of Php4,380 remains unpaid. No food or beverage inventory remained at season end. Other costs incurred during the season were boat maintenance, Php72,660, and casual

labor costs, Php86,400. He paid the interest forthe year based on the amount of the loan outstanding on May 15 and repaid Php600,000 of the loan.

In addition, Art said he withdrew Php120,000 per month during the season. The season-ending cash balance in the bank is Php881,820. No records exist regarding the amount of cash sales. Cash sales revenue must be determined using only the information already noted. Show him how you determine the unknown cash sales and prepare an accrual income statement to show him operating income before

tax for the year.