Simcoe Sliders

Simcoe Sliders (SFT) was founded by Madison Marble in 2023. Madison is a budding entrepreneur and recently graduated from a culinary school. Madison made the decision to take her skills on the road and operate a food truck to take advantage of the explosive population of street vendors.

Armed with some inheritance money, Madison went out and purchased a used food truck modifying it to suit her new business. Madison began operating the food truck in April of 2023 and chose December 31st as her year end. During the peak season, Madison hired two of her friends to assist her. She is thinking that perhaps one of them may continue to work with her in the foreseeable future. Madisons mother suggested to her that she should incorporate her food truck business when she first started. She went ahead and did so but is not sure what that means or what other reasonable alternatives she may have had. Madison has also heard from other food truck owners that they are having issues with employees stealing cash and supplies. She is wondering what reasonable steps she could do to make sure that doesnt happen.

Its now January 2024 and Madison has come to you in order to get her first year financials in order and to assist her with her other questions.

Required:

Based on the information that you have in Exhibit #1 prepare the following and respond to Madisons other questions:

1. Journal entries for all the transactions [show your work when required].
2. Final trial balance in good form.
3. Statement of income [income statement] for the period ended December 31, 2023 in good form.
4. Statement of financial position at December 31, 2023 in good form.

Exhibit #1

The following transactions took place for SFT:

1. SFT was incorporated on January 1^st, 2023. Madison invested $200,000 cash for 1,000 common shares.
2. Madisons mother invested $50,000 cash for 500 common shares.
3. The Frank Bank provided a loan of $150,000 on January 1^st. The loan requires principal payments of $10,000 per year payable on January 1^st of each year. The interest rate is 4%.
4. SFT purchased a used food truck for $45,000 on February 1^st. The truck has a useful life of 8 years and depreciation will be taken straight-line with a full year taken in the year that it was purchased.
5. SFT incurred $8,000 of truck improvement costs that included a new exterior paint job, and refurbishment of the interior. Given the fact that food trucks are more successful when they look new, Madison expects that these truck improvements will only last 5 years.
6. SFT purchased equipment on March 1^st for $25,000. The equipment is being depreciated over 8 years. Take a full year of depreciation for the first year.
7. Annual liability insurance was purchased for $3,000 covering the period February 1 to August 31 annually. The entire amount was paid on February 1^st with cash.
8. Food revenues amounted to $135,000 and all amounts were received in cash. Drink revenues [tracked separately] amounted to $22,000 and were all received in cash.
9. Salaries were paid to two employees. This amount totaled $38,000.
10. Inventory purchases [for souvenir sales] for the period totaled $180,000 with 50% of this amount still owing at year end.
11. The cost of the food that was sold was $40,000 and for beverages $4,400.
12. SFT declared and paid a dividend of $25,000.
13. SFT paid $2,000 for advertising for the year.
14. SFT paid $2,500 for utilities & internet for the year.
15. Food trucks are required to pay fees to the municipality in order to operate. SFT paid a monthly fee of $200 from April 1^st until December 31^st.
16. SFT incurred $800 in fuel costs. Of this amount $200 is still owing as of year end.
17. Since Madison is not operating the food truck during the winter months, there is no food inventory remaining. Madison did need to throw out $900 worth of food that was left over and not usable.