Question

1. Bobcat Coffee had sales of goods totaling $200,000, receiving $150,000 in cash and $50,000 on account. The cost of the goods sold were $60,000.

2. Bobcat Coffee purchased $80,000 of inventory. All purchases were on account.

3. Bobcat Coffee paid salaries of $50,000. This was payment for salaries of $35,000 and $15,000 that was payable from last year.

4. Bobcat Coffee purchased $7,000 of supplies. All of these purchases were on account.

5. Bobcat Coffee received $40,000 cash from customers who had been granted credit. The entire amount collected relates to sales from last year.

6. Bobcat Coffee paid utilities for the current month of $5,000.

7. Bobcat Coffee paid $45,000 to its suppliers related to previous purchases on account.

8. Bobcat Coffee paid $12,000 in rent for the year.

9. Bobcat Coffee incurred depreciation expense for the year on old equipment $2,000.

10. After counting its supplies on hand, Bobcat Coffee determined that they had $6,000 in supplies on-hand. [Hint: What is the amount of supplies that has been used in the month? What journal entry needs to be prepared?]

11. $9,000 of prepaid insurance expired.

12. Bobcat Coffee paid $300 of interest on its long-term debt.

13. Bobcat Coffee incurred $17,000 of salaries expense in December, but will pay this amount next month (January).

14. Bobcat Coffee declared and paid $4,000 in cash dividends.

15. Bobcat Coffee bought a new piece of equipment for $50,000. Bobcat coffee financed the equipment with a note from the bank.

16. The equipment purchased has a 10 year useful life and no expected salvage value. Depreciation is calculated on a straight-line basis.

17. Bobcat Coffee pre sold $3,000 of coffee in December 20x4 to a customer for a week-long conference scheduled for January 20X5. The customer paid upfront for the large order a month ahead of time (December) to secure the order. The coffee was then delivered as planned for the conference in January.

REQUIRED:

3. Prepare the following financial statements in proper form:

a. Income Statement (Assume income taxes are zero).

Answer 1

Income Statement
Sales		$           2,00,000
Cost of Goods Sold		$              60,000
Gross Profit		$           1,40,000
Operating Expenses
Salaries Expense	$           52,000
Supplies Expense	$             1,000
Utilities Expense	$             5,000
Rent Expense	$           12,000
Depreciation Expense	$             7,000
Insurance Expense	$             9,000
Total Operating Expenses		$              86,000
Operating Income		$              54,000
Interest Expense		$                    300
Net Income		$              53,700

The statement has been prepared from above given data, but from reading data, i believe that it may any other previous balances.
It has been assumed that asset has been purchased at beginning of year, depreciation for full year has been considered