TUTOS Prelude, January 14": Cupid and his family, as is their regular routine, visit the local farmers market on their weekly shopping trip. Deborah, a local candy-producer and friend of Cupid's family, is selling her candy at the market. Cupid tells Deborah how much he likes her candy. Deborah knows that Cupid is a budding entrepreneur and asks if he will ; try selling her boxed Valentine's chocolates at the Food & Gift Festival on February 104, 11", & 124 Deborah says that she will be out of town most of that weekend and wants Cupid to sell the product to keep building awareness of her candy products. She also says that she has a booth reservation and he would have to pay the Food & Gift Festival show management a $300 booth fee on February 10 along with a refundable $30 clean-up fee. Deborah gives the following information: Boxed Valentine chocolate sells at a market price of $9.00 cach Deborah can prove that her chocolate has Fair Trade Certification Cupid can buy boxed chocolate from her for $5.00 each Boxed chocolate inventory is enough to cover the needs of Food & Gift Festival Cupid can keep any of the net income from the festival Deborah will return on the afternoon of February 12 and expects to be paid then for inventory acquired & sold from her storage unit! Cupid agrees to Deborah's offer and decides to sell boxed Valentine chocolates at the Food & Gift Festival. Cupid asks his sister, Ginger, to help in the booth and he would pay her $30 a day. Ginger agrees. Friday, February 10": Prior to coming to the show, Cupid took $500 out of his secret stash of personal savings and he acquired 120 boxes from Deborah's storage unit. Cupid sets up the stand and pays the show manager, Kavinda, $330 in cash. At 2:30 in the afternoon, Mr. Lupercalia, prepays $180 to buy 20 boxes that Cupid will have ready for pick-up on Sunday morning, Walk-up sales are good and they sell 105 boxes in this manner by end of the day. Ginger, who worked hard, mentions that her wage of $30 per day is too low. Cupid and Ginger agree that $60 a day is fair and that she will be paid at the end of the festival. EZ2 CUV Saturday, February 11": Before the show opens, Cupid retrieves 350 boxes from the storage unit because Saturday is believed to be the big sales day. The Young Professionals' club asks Cupid if they could buy 40 boxes and pay him tomorrow, Cupid agrees. ONE Ms. James of Fair World Trade Coalition comes by on Saturday representing her charitable organization that tries to make holidays more BE bearable for the less fortunate in Oregon. Ms. MINE James, seeing the Fair Trade Certification sign, asks Cupid if he would consider making a CAKE donation of boxed chocolate to this worthy cause. After a brief pause, Cupid says yes and gives Ms. James 20 boxes of chocolate. (Cupid still has to pay for inventory used, no matter what the purpose.) Walk-up sales amounted to 277 units sold for the day. Sunday, February 12% Before the show opens, Cupid retrieves 200 boxes from the storage unit. OU KID Mr. Lupercalia picks up his boxes and the Young Professionals pay Cupid. Walk-up sales amounted to 207 units sold for the day. Kavinda comes by, sees a clean booth, and returns the $30 cleaning fee. Ginger mentions that sales today were about twice Friday's sales and she wants a bonus, after haggling with her brother, they agree to a $60 bonus-payment. Cupid pays Ginger all amounts owed. Deborah stops by and is amazed by the amount of sales made. Cupid pays Deborah for the inventory retrieved less what she takes back with her. Cupid recovers his original cash-injection by withdrawing $500. Required: Prepare, in good form, a classified balance sheet and an income statement at the end of each day (February 10, 11 & 12") using accrual accounting. There are various examples of statements made in good form in your textbook. Treat each day as a separate accounting period. Assume all transactions are material. (Make sure you understand the difference between current and long-term in regard to assets and liabilities when developing these statements.) Valentine Day Chocolate Inventory Tally Sheet Inventory Cost per unit $ 5.00 600.00 Units Cumulative Total 120 15 365 325 305 28 Units Date booth out of booth 10-Feb 120 10-Feb (105) 11-Feb 350 11-Feb (40) 11-Feb (20) 11-Feb (277) 12-Feb 200 12-Feb (20) 12-Feb (207) 12-Feb (1) 1.750.00 Inventory Check 600.00 75.00 1.825.00 1.625.00 1.525.00 140.00 1.140.00 1,040.00 5.00 What Happened? Purchase on Account Sales - Walk-up Purchase on Account Sales - Young Professionals Contributed Chocolate Sales - Walk-up Purchase on Account Deferred Account pick-up Sales - Walk-up Deborah recovers unsold Inventory 228 1.000.00 208 1 -0 (5.00) Owed to Vendor 3.345.00 Total paid to Deborah Balance of Accounts Payable: 3,345.00 Valentine Day Chocolate Journal Entries 10-Feb-11 # Account Name Dr 1 X x X To record initial cash investment by Cupid 2 x x X To record payment to Holiday Gift show management x To record purchase of 120 boxes of chocolate @ $5.00 ouch 4 x To record prepayment of 20 boxes of chocolato at $9.00 each by Mr. Lupercalia. 5 x To record sale of 105 boxes at $9.00 en. to walk-up customers 6 X To record the cost of goods sold for TOS boxes @ $5.00 each 7 X To record accrued wages owed to Ginger 8 x To record adjustment needed for accrual of booth expense for period 9 To close Revenge out to the income Summary account 10 x X x X X x x X X x To close COGS and expense accounts out to the income Summary account 11 x To close the income Summary account out to the Retained Eamings account Valentine Day Chocolate BA 211 Friday, February 10th Cash Accounts Payable Capital Cupid 1 2 3 End Bal. End Bal 5 End Bal Inventory COGS Retained Earings 6 6 11 CLOSIN End Bal End Bal 10 CLOSING Prepaid Booth Fee Deferred Chocolate Sales 8 ADJUSTING 4 End Bal End Bal: 9 CLOSING Prepaid Clean-up Fue Wages Payable Wages Expense 7 ADJUSTING 2 End Bal 7 ADJUSTING End Bal 10 CLOSIN Booth Rental Expense Income Summary 8 ADJUSTING 9 CLOSING 10 CLOSIN 10 CLOSING 10 CLOSING 10 CLOSING subtotal 11 CLOSING Valentine Day Chocolate Balance Sheet 2/10/11 $ $ Assets Current Assets Cash Inventory Prepaid Booth Fees Prepaid Clean-up Fees Total Current Assets ... Liabilities Current Liabilities Accounts Payable Deferred Candy Sales Wages Payable Total Current Liabilities Equity Capital, Cupid Retained Earnings Total Equity Total Assets Total Liabilities & Capital Valentine Day Chocolate Income Statement For the day ended February 10, 2012 $ Sales Cost of Goods Sold Gross Margin Operating Expenses Booth Expenses Wages Total Operating Expenses Net Income TUTOS Prelude, January 14": Cupid and his family, as is their regular routine, visit the local farmers market on their weekly shopping trip. Deborah, a local candy-producer and friend of Cupid's family, is selling her candy at the market. Cupid tells Deborah how much he likes her candy. Deborah knows that Cupid is a budding entrepreneur and asks if he will ; try selling her boxed Valentine's chocolates at the Food & Gift Festival on February 104, 11", & 124 Deborah says that she will be out of town most of that weekend and wants Cupid to sell the product to keep building awareness of her candy products. She also says that she has a booth reservation and he would have to pay the Food & Gift Festival show management a $300 booth fee on February 10 along with a refundable $30 clean-up fee. Deborah gives the following information: Boxed Valentine chocolate sells at a market price of $9.00 cach Deborah can prove that her chocolate has Fair Trade Certification Cupid can buy boxed chocolate from her for $5.00 each Boxed chocolate inventory is enough to cover the needs of Food & Gift Festival Cupid can keep any of the net income from the festival Deborah will return on the afternoon of February 12 and expects to be paid then for inventory acquired & sold from her storage unit! Cupid agrees to Deborah's offer and decides to sell boxed Valentine chocolates at the Food & Gift Festival. Cupid asks his sister, Ginger, to help in the booth and he would pay her $30 a day. Ginger agrees. Friday, February 10": Prior to coming to the show, Cupid took $500 out of his secret stash of personal savings and he acquired 120 boxes from Deborah's storage unit. Cupid sets up the stand and pays the show manager, Kavinda, $330 in cash. At 2:30 in the afternoon, Mr. Lupercalia, prepays $180 to buy 20 boxes that Cupid will have ready for pick-up on Sunday morning, Walk-up sales are good and they sell 105 boxes in this manner by end of the day. Ginger, who worked hard, mentions that her wage of $30 per day is too low. Cupid and Ginger agree that $60 a day is fair and that she will be paid at the end of the festival. EZ2 CUV Saturday, February 11": Before the show opens, Cupid retrieves 350 boxes from the storage unit because Saturday is believed to be the big sales day. The Young Professionals' club asks Cupid if they could buy 40 boxes and pay him tomorrow, Cupid agrees. ONE Ms. James of Fair World Trade Coalition comes by on Saturday representing her charitable organization that tries to make holidays more BE bearable for the less fortunate in Oregon. Ms. MINE James, seeing the Fair Trade Certification sign, asks Cupid if he would consider making a CAKE donation of boxed chocolate to this worthy cause. After a brief pause, Cupid says yes and gives Ms. James 20 boxes of chocolate. (Cupid still has to pay for inventory used, no matter what the purpose.) Walk-up sales amounted to 277 units sold for the day. Sunday, February 12% Before the show opens, Cupid retrieves 200 boxes from the storage unit. OU KID Mr. Lupercalia picks up his boxes and the Young Professionals pay Cupid. Walk-up sales amounted to 207 units sold for the day. Kavinda comes by, sees a clean booth, and returns the $30 cleaning fee. Ginger mentions that sales today were about twice Friday's sales and she wants a bonus, after haggling with her brother, they agree to a $60 bonus-payment. Cupid pays Ginger all amounts owed. Deborah stops by and is amazed by the amount of sales made. Cupid pays Deborah for the inventory retrieved less what she takes back with her. Cupid recovers his original cash-injection by withdrawing $500. Required: Prepare, in good form, a classified balance sheet and an income statement at the end of each day (February 10, 11 & 12") using accrual accounting. There are various examples of statements made in good form in your textbook. Treat each day as a separate accounting period. Assume all transactions are material. (Make sure you understand the difference between current and long-term in regard to assets and liabilities when developing these statements.) Valentine Day Chocolate Inventory Tally Sheet Inventory Cost per unit $ 5.00 600.00 Units Cumulative Total 120 15 365 325 305 28 Units Date booth out of booth 10-Feb 120 10-Feb (105) 11-Feb 350 11-Feb (40) 11-Feb (20) 11-Feb (277) 12-Feb 200 12-Feb (20) 12-Feb (207) 12-Feb (1) 1.750.00 Inventory Check 600.00 75.00 1.825.00 1.625.00 1.525.00 140.00 1.140.00 1,040.00 5.00 What Happened? Purchase on Account Sales - Walk-up Purchase on Account Sales - Young Professionals Contributed Chocolate Sales - Walk-up Purchase on Account Deferred Account pick-up Sales - Walk-up Deborah recovers unsold Inventory 228 1.000.00 208 1 -0 (5.00) Owed to Vendor 3.345.00 Total paid to Deborah Balance of Accounts Payable: 3,345.00 Valentine Day Chocolate Journal Entries 10-Feb-11 # Account Name Dr 1 X x X To record initial cash investment by Cupid 2 x x X To record payment to Holiday Gift show management x To record purchase of 120 boxes of chocolate @ $5.00 ouch 4 x To record prepayment of 20 boxes of chocolato at $9.00 each by Mr. Lupercalia. 5 x To record sale of 105 boxes at $9.00 en. to walk-up customers 6 X To record the cost of goods sold for TOS boxes @ $5.00 each 7 X To record accrued wages owed to Ginger 8 x To record adjustment needed for accrual of booth expense for period 9 To close Revenge out to the income Summary account 10 x X x X X x x X X x To close COGS and expense accounts out to the income Summary account 11 x To close the income Summary account out to the Retained Eamings account Valentine Day Chocolate BA 211 Friday, February 10th Cash Accounts Payable Capital Cupid 1 2 3 End Bal. End Bal 5 End Bal Inventory COGS Retained Earings 6 6 11 CLOSIN End Bal End Bal 10 CLOSING Prepaid Booth Fee Deferred Chocolate Sales 8 ADJUSTING 4 End Bal End Bal: 9 CLOSING Prepaid Clean-up Fue Wages Payable Wages Expense 7 ADJUSTING 2 End Bal 7 ADJUSTING End Bal 10 CLOSIN Booth Rental Expense Income Summary 8 ADJUSTING 9 CLOSING 10 CLOSIN 10 CLOSING 10 CLOSING 10 CLOSING subtotal 11 CLOSING Valentine Day Chocolate Balance Sheet 2/10/11 $ $ Assets Current Assets Cash Inventory Prepaid Booth Fees Prepaid Clean-up Fees Total Current Assets ... Liabilities Current Liabilities Accounts Payable Deferred Candy Sales Wages Payable Total Current Liabilities Equity Capital, Cupid Retained Earnings Total Equity Total Assets Total Liabilities & Capital Valentine Day Chocolate Income Statement For the day ended February 10, 2012 $ Sales Cost of Goods Sold Gross Margin Operating Expenses Booth Expenses Wages Total Operating Expenses Net Income