Syrena Shirley, a connoisseur of fine chocolate, opened Syrena's Sweets in Collegetown on February 1, 2011. The
Question:
Syrena Shirley, a connoisseur of fine chocolate, opened Syrena's Sweets in Collegetown on February 1, 2011. The shop specializes in a selection of gourmet chocolate candies and a line of gourmet ice cream. You have been hired as manager. Your duties include maintaining the store's financial records.
The following transactions occurred in February 2011, the first month of operations.
a. Received four shareholders' contributions totaling $17,600 cash to form the corporation; issued stock.
b. Paid three months' rent for the store at $880 per month (recorded as prepaid expenses).
c. Purchased supplies for $330 cash.
d. Purchased and received candy for $5,500 on account, due in 60 days.
e. Negotiated and signed a two-year $11,000 loan at the bank.
f. Used the money from (e) to purchase a computer for $2,750 (for recordkeeping and inventory tracking) and the balance for furniture and fixtures for the store.
g. Placed a grand opening advertisement in the local paper for $500 cash.
h. Made sales on Valentine's Day totaling $2,000; $1,675 was in cash and the rest on accounts receivable.
The cost of the candy sold was $1,100.
i. Made a $550 payment on accounts payable.
j. Incurred and paid employee wages of $450.
k. Collected accounts receivable of $55 from customers.
l. Made a repair to one of the display cases for $130 cash.
m. Made cash sales of $2,200 during the rest of the month. The cost of the candy sold was $1,210.
Required:
1. Set up appropriate T-accounts for Cash, Accounts Receivable, Supplies, Merchandise Inventory, Prepaid Expenses, Equipment, Furniture and Fixtures, Accounts Payable, Notes Payable, Contributed Capital, Sales Revenue, Cost of Goods Sold (expense), Advertising Expense, Wage Expense, and Repair Expense. All accounts begin with zero balances.
2. Record in the T-accounts the effects of each transaction for Syrena's Sweets in February, referencing each transaction in the accounts with the transaction letter. Show the ending balances in the T-accounts. Note that transactions (h) and (m) require two types of entries, one for revenue recognition and one for the expense.
3. Prepare financial statements at the end of the month ended February 28, 2011 (income statement, statement of retained earnings, and balance sheet).
4. Write a short memo to Syrena offering your opinion on the results of operations during the first month of business.
5. After three years in business, you are being evaluated for a promotion. One measure is how efficiently you managed the assets of the business. The following data are available:
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Required:
Compute the total asset turnover ratio for 2012 and 2013 and evaluate the results. Do you think you should be promoted?Why?
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
Step by Step Answer:
Req 1 and 2 Req 3 SERENAS SWEETS Income Statement unadjusted For the Month Ended February 28 2011 Revenues Sales revenue Expenses Cost of goods sold A...View the full answer
