Income Statement A (scroll down for Income Statement B):

Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. Hes also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information.

	Required:
1.	Choose whether the characteristics on the Managerial vs. Financial panel are most often associated with managerial accounting or financial accounting.
2.	Charles has provided some of the costs he expects to incur on the Cost Classification panel. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake.
3.	Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B on the Income Statements panel, and balance sheets C and D on the Balance Sheets panel. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie company. Then, on the Financial Statements panel, denote which income statement and balance sheet would be most appropriate for a manufacturing business.
4.	At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data hes collected, but he was unable to figure out some of the amounts. On the Costs and Balances panel, determine the missing amounts. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values.

Sample Company A

Income Statement

For the Year Ended December 31, 20Y8

1	Sales		$42,000.00
2	Cost of goods sold:
3	Beginning finished goods inventory	$5,250.00
4	Plus cost of goods manufactured	6,400.00
5	Cost of finished goods available for sale	$11,650.00
6	Less ending finished goods inventory	400.00
7	Cost of goods sold		11,250.00
8	Gross profit		$30,750.00
9	Operating expenses:
10	Selling expenses	$6,400.00
11	Administrative expenses	5,250.00
12	Total operating expenses		11,650.00
13	Net income		$19,100.00

Income Statement B:

Sample Company B

Income Statement

For the Year Ended December 31, 20Y8

1	Sales		$42,000.00
2	Cost of goods sold:
3	Beginning merchandise inventory	$5,250.00
4	Plus net purchases	6,400.00
5	Merchandise available for sale	$11,650.00
6	Less ending merchandise inventory	400.00
7	Cost of merchandise sold		11,250.00
8	Gross profit		$30,750.00
9	Operating expenses:
10	Selling expenses	$6,400.00
11	Administrative expenses	5,250.00
12	Total operating expenses		11,650.00
13	Net income		$19,100.00