Instructions:

The company Kentucky Wild Ribs has been created on January $12018$ in a country where

income tax does not exist. The company, on top of selling menus to customers, also provides

consulting services to new restaurants around the world. Using the information below, build

the income statement, the balance sheet, and the cash flow statement $($direct method$)$ for

the year ending on December $312018.$

All the transactions that occurred during $2018$ are listed below.

$1.1$st of January, $2018$

On the $1$st of January, $2018$ Kentucky Wild Ribs was incorporated. The owners contributed

$$100,000$ in total, which was divided into $200,000$ shares.

$2.1$st of February $2018$

Kentucky Wild Ribs borrowed $$240,000$ from the bank on the $1$st of February, $2018.$ The loan

will be repaid in $6$ years $($no repayment until then$).$ Interest is calculated with an annual rate

of $2\%$ and is due on the $31$st of January every year.

$3.31$st of March, $2018$

On this day, Kentucky Wild Ribs purchased $($and paid cash$)$:

$$ Kitchen equipment for $$150,000($depreciation method: straight$-$line, useful life: $5$

years, residual value: $$0).$

$$ Office equipment for $$50,000($depreciation method: straight$-$line, useful life: $5$ years,

residual value: $$10,000).$

$4.$ During the year

During the year, the company purchased for $$150,000$ of inventory. On the $31$st of December

$2018,10\%$ of this amount was still not paid to the supplier.

$5.$ During the year

During the year, the company sold menus for $$300,000($worth $$100,000$ in inventory$).$ On the

$31$st of December $2018,20\%$ of this amount was still not paid by customers. Cost of goods sold

has to be updated.

$6.15$th of December, $2018$

Hotel Financial Statements Analysis

$\copyright$ C$é$dric Poretti, Ecole h$ô$teli$è$re de Lausanne $2$

On the $15$th of December, a local start$-$up paid to Kentucky Wild Ribs $$36,000$ cash for

consulting fees. The consulting will be provided to the start$-$up over $6$ months, until the $15$th

of June $2019(15$ days in $2018,165$ days in $2019).$ Hint: $15$ days of consulting revenue are

earned in $2018.$

$7.31$st of December, $2018$

Other operating expenses $($water$,$ electricity and maintenance$)$ for the year amounted to

$$25,000$ and were all paid in cash. The different rents $($they have all been paid$)$ for the year

amounted to $$30,000.$ The company also paid each of its three employees $($hired on the $1$st of

January $2018)$ $$50,000$ a year.