Question

Required information (The following information applies to the questions displayed below.) Kaylee James, a connoisseur of fine chocolate, opened Kaylee's Sweets in Collegetown on February 1. 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, the first month of operations. a. Received four shareholders' contributions totaling $27,900 cash to form the corporation; issued 600 shares of $0.10 par value common stock. b. Paid three months' rent for the store at $1,880 per month (recorded as prepaid expenses). c. Purchased and received candy for $5,900 on account, due in 60 days. d. Purchased supplies for $1,430 cash. e. Negotiated and signed a two-year $12,000 loan at the bank, receiving cash at the time. f. Used the money from (e) to purchase a computer for $3,250 (for recordkeeping and inventory tracking); used the balance for furniture and fixtures for the store. g. Placed a grand opening advertisement in the local paper for $410 cash; the ad ran in the current month. h. Made sales on Valentine's Day totaling $3,800; $2,680 was in cash and the rest on accounts receivable. The cost of the candy sold was $2,000. i. Made a $590 payment on accounts payable. j. Incurred and paid employee wages of $2,000. k. Collected accounts receivable of $185 from customers. 1. Made a repair to one of the display cases for $100 cash. m. Made cash sales of $2,400 during the rest of the month. The cost of the candy sold was $1,210.

Answer 1

KAYLEE'S SWEETS
Income Statement (Unadjusted)
Revenues
Sales ($3,800+2,400)	$   6,200
Total reveneues	$   6,200
Expenses
Advertisement expenses	$      410
Cost of goods sold ($2,000+$1,210)	$   3,210
Wages expense	$   2,000
Repairs and maintenance	$      100
Total expenses	$   5,720
Net income	$      480

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