Question

Required information [The following information applies to the questions displayed below.] Lisa Frees and Amelia Ellinger have been operating a catering business for several years. In March, the partners plan to expand by opening a retail sales shop. They have decided to form the business as a corporation called Traveling Gourmet, Inc. The following transactions occurred in March: a. Received $93,000 cash from each of the two shareholders to form the corporation, in addition to $3,300 in accounts receivable, $7,900 in equipment, a van (equipment) appraised at a fair value of $15,600, and $1,850 in supplies. Gave the two owners each 760 shares of common stock with a par value of $1 per share. b. Purchased a vacant store for sale in a good location for $490,000, making a $98,000 cash down payment and signing a 10-year mortgage note from a local bank for the rest. c. Borrowed $63,000 from the local bank on a 10 percent, one-year note. d. Purchased food and paper supplies costing $12,800 in March; paid cash. e. Catered four parties in March for $5,500; $1,860 was billed and the rest was received in cash. f. Sold food at the retail store for $17,550 cash; the food and paper supplies used cost $11,090. (Hint: Record two the revenue effect separate from the expense effect.) g. Received a $550 telephone bill for March to be paid in April. h. Paid $493 in gas for the van in March. i. Paid $8,880 in wages to employees who worked in March. j. Paid a $430 dividend from the corporation to each owner. k. Purchased $63,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $26,500 (added to the cost of the building); paid cash.

Answer 1

Revenues:
Catering sales revenue	5,500
Food sales revenue	17,550
Total Revenue	23,050
Expenses:
Supplies	11,090
Phone	550
Gas	493
Wages	8,880
Total cost and Expenses	21,013
Net income	2,037

a. Financing - $186,000 inflow

b. Investing - $98,000 outflow

c. Financing - $63,000 inflow

d. Operating - $12,800 outflow

e. Operating - $3,640 inflow

f. Operating - $17,550 inflow

g. No effect (no cash was paid)

h. Operating - $493 outflow

i. Operating - $8,880 outflow

j. Financing - $860outflow

k. Investing - $89,500 outflow