Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

JJ Asian Cuisine has been in the business for a while. They started selling Shanghai Hand pull noodles and Lamb Cumin. The business is going

JJ Asian Cuisine has been in the business for a while. They started selling Shanghai Hand pull noodles and Lamb Cumin. The business is going well with a very healthy cash flow. After Cons retirement, Jason and James have now been forced to make the following consideration.

option 1; opening an actual shop front. (Investment life 10 years)

They will continue selling frozen foods to supermarkets, local markets and directly online but they also want to utilise their brand name serving customers directly in their restaurant.

There are many commercial premises currently for lease on Clayton Road. They have managed to find one of suitable size, and location with good car parking around. They want to set up the business from scratch utilising their brand name.

They are willing to enter a ten-year lease for the premises and have estimated an initial outlay of $300,000 for kitchen equipment, restaurant furniture and refitting of the premises.

They currently have roughly $50,000 in their bank account and will therefore need to borrow another $250,000 at an 8% interest only loan, paid monthly, principal payable at the end of year 10.

New staff will be required under this option; additional chef and staff for waiting on tables, along with increases in promotional materials etc. See Proforma (Budgeted) Statements for estimated performance of shop front option.

option 2; recreate the same existing model in a different venue (Investment life 5 years)

They will need to recreate the same business model they are currently running, but in another location. Relocation costs are estimated at $50,000. The business will run the same way for the next five years at the same level as the year just passed (year 2021). Revenues and expenses assumed to remain the same over the next five years, as the year just passed. (see Income Statement 2021)

Jason and James has provided you with the following financial reports.

image text in transcribed
2021 J80 Cuisine Income Statement Option 2 J80 Cuisine Proforma {Budgeted} Income Statements l[lipution 1 I 20232031 s I s I Restaurant meals sales 102,500.0 325,000.0 Total 388.8001) 491.3001) 745,000.!) Expenses Grocery expense 106,380.0 104,500.0 176,000.0 Petrol expense 6,480.00 3,880.00 4,200.00 Wages expense 1?2,100.0 268,000.0 322,400.0 Packaging Supplies 21,600.00 20,200.00 23,251.00 133-33 I 133-33 600-00 I 600-00 400-00 I 400-00 1000-00 I 2000-00 Dg're kitchen \"BULK rest furniture i ret 45,000.00 I 45,000.00 Promotional {Advertising 50,000.00 15,000.00 Rent expense 15,840.00 42,000.00 42,000.00 Electricity and Gas 15,130.00 22,000.00 25,000.00 Water 1,120.00 3,200.00 3,800.00 Business registration fee Interest expense 20,000.00 20,000.00 Total 341.8313 532.4113 6303943 412113-33 I 54,205.57

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting The Cornerstone Of Business Decision Making

Authors: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

8th Edition

0357715349, 978-0357715345

More Books

Students also viewed these Accounting questions