YUMMYCAKES CASE lower price I purchase more at a time This year I purchased and received 605,000 of inventory My vendors let me buy on credit and then pay them later Thus, I still owe my vendors 40,000 Currently, I have about 10,000 of inventory that I haven't used that is at the bakery Mamie continued Business has been strong and I've been selling to a variety of places I've put more miles on the delivery truck than I expected to, so it will only last another three years I will probably need to replace the equipment after another two years I've found a great location for my baking and office space, which I rent for only 1,500 a month However, to get that low rent, I had to sign a three year lease and must pay three months of rent at a time At the end of December I paid the landlord for rent through March 2022 Since the location is great and the rental rate is good I didn't mind signing the three year lease and having to pay rent in advance I've also paid myself the 40 000 salary as we agreed I currently have 3,500 in the bank You told your friends that it seemed as though both businesses were doing well and you were happy with your investments After they left, you begin to think about the cash you originally gave each of them and how each performed Yes, you think, they both did well Mamie received more cash from customers, but Petey has more cash in the bank So, who did better You have decided to invest in two cupcake shops in Paris You have two friends (Petey and Mamie) who recently graduated from culinary school Each friend will run one of the shops Each will have full discretion over establishing and managing the businesses On January 1, 2021, you gave each friend 50,000 to start the businesses at the beginning of 2020 in exchange for 10,000 shares of common stock Petey and Mamie have each agreed to receive a starting salary of 40,000 per year Petey decided to focus on selling cupcakes directly to customers, so he opened a bakery and retail store in the 5th Arrondissement of Paris On January 1, 2021, he purchased equipment for 21,000 and furniture for 11,000 At that time, he also purchased a store for 500,000 He paid 10,000 in cash and borrowed the remaining 490,000 from a bank The bank loan has an interest rate of 6 percent a year Petey pays interest on the 10th of the month for the previous month's interest but will pay no principal until January 1, 2031, when the loan is due in full Although the loan is for 10 years, Petey expects to use the building for at least 30 years Mamie decided to focus on selling cupcakes to restaurants and corporations, so she rented baking and office space in the 20th Arrondissement of Paris on January 1, 2021 She purchased equipment for 24,000 and a delivery truck for 30,000 In early January 2022, you flew to Paris from your home in the United States to meet with Petey and Mamie and discuss the results of your investments Petey said Business has been good Customers come in and pay cash when they purchase the cupcakes This year I collected 430,000 in cash from my customers (Like many retail businesses, Petey considers credit cards from customers the same as cash because credit card companies transfer cash to the business within a few days of the transaction ) Throughout the year, I've purchased and received 280 000 in baking inventory for the shop from various vendors I pay cash when I purchase these items I try to buy just what I need, so I only have about 1000 of unused inventory in the shop at any point in time The shop is working out great and the customers love it However, there has been more wear and tear on the furniture than I expected, so it will probably only last one more year Fortunately, the equipment I purchased is probably good for another three years Petey continued The bank loan isn't due until 2031 and I've been keeping current with the monthly interest payments of 2,350 I'll be paying December's interest in the next few days Also, I recently wrote you a dividend check for 5,000 As we agreed I received a salary of 40,000 for the year Currently, I have 86 050 in the bank Mamie spoke next I've focused on selling to restaurants and corporations on credit, so they pay me later I typically collect money within 30 days of making the sale This year I sold 710,000 of merchandise however, as of year end, I've only collected 635,000 of this amount and my customers still owe me the remainder With the state of the current economy, I'm afraid I won't be able to collect up to 10,000 of what my customers still owe me Throughout the year, I've also purchased baking inventory for the shop from various vendors To receive quantity discounts and purchase the ingredients for a slightly Activate Windows Go to Settings to activate 1128 words LX Accessibility Investigate C Focus 6 Type here to search o O 32F Cloudy M REQUIRED To help you analyze your two investments, complete the following 1) 2021 income statement for Petey 2) 12 31 21 balance sheet for Petey 3) 4) 2021 income statement for Mamie 12 31 21 balance sheet for Mamie 5) ratios A paragraph explaining who did better, and why Support your conclusion with relevant APPENDIX B 2021 Cash Transactions for Mamie's Cupcake Bakery Beginning Cash Balance 0 CASH INFLOWS Initial investment 50,000 Cash from customers 635,000 Total Cash Inflows (receipts) 685 000 CASH OUTFLOWS Purchase of equipment 24 000 Purchase of delivery truck 30,000 Cash paid to vendors for inventory 565 000 Cash paid to Mamie for her salary 40,000 Rent payments (15 months) 22,500 Total Cash Outflows (disbursements) 681,500 ENDING CASH BALANCE 3,500 As you complete the requirements, round calculations to the nearest euro Any depreciation should be calculated on a straight line basis with no salvage value The following cash reports from Petey and Mamie might be helpful (Petey and Mamie do not have accounting backgrounds, so these are not formal Statements of Cash Flows) You may ignore the timing of the cash flows and assume cash came in as needed APPENDIX A 2021 Cash Transactions for Petey's Cupcake Shoppe Beginning Cash Balance 0 CASH INFLOWS Initial investment 50,000 Cash from customers 430,000 Borrowed cash from the bank 490,000 Total Cash Inflows (receipts) 970 000 CASH OUTFLOWS Purchased store (no land just the store) Purchase of equipment Purchase of furniture Interest paid to bank (11 months) Cash paid to vendors for inventory Cash paid to Petey for his salary Cash paid to you (investor) Total Cash Outflows (disbursements) ENDING CASH BALANCE 500,000 21,000 11,000 26,950 280,000 40,000 5,000 883 950 86 050 Activate Win Go to Settings to ards Accessibility Investigate Focus 4 here to search O con ' c con W 32F Cloudy

Question

YUMMYCAKES CASE lower price  I purchase more at a time  This year I purchased and received 605,000 of inventory  My vendors let me buy on credit and then pay them later  Thus, I still owe my vendors 40,000  Currently, I have about 10,000 of inventory that I haven't used that is at the bakery  Mamie continued  Business has been strong and I've been selling to a variety of places  I've put more miles on the delivery truck than I expected to, so it will only last another three years  I will probably need to replace the equipment after another two years  I've found a great location for my baking and office space, which I rent for only 1,500 a month  However, to get that low rent, I had to sign a three year lease and must pay three months of rent at a time  At the end of December  I paid the landlord for rent through March 2022  Since the location is great and the rental rate is good  I didn't mind signing the three year lease and having to pay rent in advance  I've also paid myself the 40 000 salary as we agreed  I currently have 3,500 in the bank  You told your friends that it seemed as though both businesses were doing well and you were happy with your investments  After they left, you begin to think about the cash you originally gave each of them and how each performed  Yes,  you think,  they both did well  Mamie received more cash from customers, but Petey has more cash in the bank  So, who did better   You have decided to invest in two cupcake shops in Paris  You have two friends (Petey and Mamie) who recently graduated from culinary school  Each friend will run one of the shops  Each will have full discretion over establishing and managing the businesses  On January 1, 2021, you gave each friend 50,000 to start the businesses at the beginning of 2020 in exchange for 10,000 shares of common stock  Petey and Mamie have each agreed to receive a starting salary of 40,000 per year  Petey decided to focus on selling cupcakes directly to customers, so he opened a bakery and retail store in the 5th Arrondissement of Paris  On January 1, 2021, he purchased equipment for 21,000 and furniture for 11,000  At that time, he also purchased a store for 500,000  He paid 10,000 in cash and borrowed the remaining 490,000 from a bank  The bank loan has an interest rate of 6 percent a year  Petey pays interest on the 10th of the month for the previous month's interest but will pay no principal until January 1, 2031, when the loan is due in full  Although the loan is for 10 years, Petey expects to use the building for at least 30 years  Mamie decided to focus on selling cupcakes to restaurants and corporations, so she rented baking and office space in the 20th Arrondissement of Paris on January 1, 2021  She purchased equipment for 24,000 and a delivery truck for 30,000  In early January 2022, you flew to Paris from your home in the United States to meet with Petey and Mamie and discuss the results of your investments  Petey said  Business has been good  Customers come in and pay cash when they purchase the cupcakes  This year I collected 430,000 in cash from my customers  (Like many retail businesses, Petey considers credit cards from customers the same as cash because credit card companies transfer cash to the business within a few days of the transaction ) Throughout the year, I've purchased and received 280 000 in baking inventory for the shop from various vendors  I pay cash when I purchase these items  I try to buy just what I need, so I only have about 1000 of unused inventory in the shop at any point in time  The shop is working out great and the customers love it  However, there has been more wear and tear on the furniture than I expected, so it will probably only last one more year  Fortunately, the equipment I purchased is probably good for another three years  Petey continued  The bank loan isn't due until 2031 and I've been keeping current with the monthly interest payments of 2,350  I'll be paying December's interest in the next few days  Also, I recently wrote you a dividend check for 5,000  As we agreed  I received a salary of 40,000 for the year  Currently, I have 86 050 in the bank  Mamie spoke next  I've focused on selling to restaurants and corporations on credit, so they pay me later  I typically collect money within 30 days of making the sale  This year I sold 710,000 of merchandise  however, as of year end, I've only collected 635,000 of this amount and my customers still owe me the remainder  With the state of the current economy, I'm afraid I won't be able to collect up to 10,000 of what my customers still owe me  Throughout the year, I've also purchased baking inventory for the shop from various vendors  To receive quantity discounts and purchase the ingredients for a slightly Activate Windows Go to Settings to activate 1128 words LX Accessibility  Investigate C Focus 6 Type here to search o O 32F Cloudy M REQUIRED  To help you analyze your two investments, complete the following  1) 2021 income statement for Petey 2) 12 31 21 balance sheet for Petey 3) 4) 2021 income statement for Mamie 12 31 21 balance sheet for Mamie 5) ratios  A paragraph explaining who did better, and why  Support your conclusion with relevant APPENDIX B 2021 Cash Transactions for Mamie's Cupcake Bakery Beginning Cash Balance 0 CASH INFLOWS Initial investment 50,000 Cash from customers 635,000 Total Cash Inflows (receipts) 685 000 CASH OUTFLOWS Purchase of equipment 24 000 Purchase of delivery truck 30,000 Cash paid to vendors for inventory 565 000 Cash paid to Mamie for her salary 40,000 Rent payments (15 months) 22,500 Total Cash Outflows (disbursements) 681,500 ENDING CASH BALANCE 3,500 As you complete the requirements, round calculations to the nearest euro  Any depreciation should be calculated on a straight line basis with no salvage value  The following cash reports from Petey and Mamie might be helpful (Petey and Mamie do not have accounting backgrounds, so these are not formal Statements of Cash Flows)  You may ignore the timing of the cash flows and assume cash came in as needed  APPENDIX A 2021 Cash Transactions for Petey's Cupcake Shoppe Beginning Cash Balance 0 CASH INFLOWS Initial investment 50,000 Cash from customers 430,000 Borrowed cash from the bank 490,000 Total Cash Inflows (receipts) 970 000 CASH OUTFLOWS Purchased store (no land just the store) Purchase of equipment Purchase of furniture Interest paid to bank (11 months) Cash paid to vendors for inventory Cash paid to Petey for his salary Cash paid to you (investor) Total Cash Outflows (disbursements) ENDING CASH BALANCE 500,000 21,000 11,000 26,950 280,000 40,000 5,000 883 950 86 050 Activate Win Go to Settings to ards Accessibility  Investigate Focus 4 here to search O con ' c con W 32F Cloudy

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YUMMYCAKES CASE lower price. I purchase more at a time. This year I purchased and received 605,000 of inventory. My vendors let me buy on

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