Prepare a Balance Sheet for Seafood Cuisine Inc. as of March 31, 2020

In January 2020, Mackenzie and Sophia Sidgman, co-owners of Seafood Cuisine got together to discuss the expansion of their restaurant from a single location in Anchorage, AK, to Juneau. This restaurant would be called Juneau’s Seafood Kitchen. Although the Anchorage restaurant had been open for only two years, it had a loyal customer base from neighboring businesses and the University of Alaska Anchorage (UAA). Despite the success of the restaurant in Anchorage up to this point, Mackenzie and Sophia knew they would need to borrow money to finance the new restaurant. They also understood that they would be expected to present a set of current financial statements as part of any loan application. In addition, they anticipated that their future business prospects would be better if they formed a company that could function as a parent company for their current restaurant and any future restaurants that they might open.

With this decision made, they began the long and onerous process of setting up their restaurant. As a result, in March 2020, they formed Seafood Cuisine, Inc. by contributing $11,000 in cash in exchange for all of the company’s 1,100 shares of stock. Sophia convinced her father to loan the new venture $150,000 in cash, with principal payable at the rate of $15,000 per year over ten years and interest payable at a rate of 5.5% on the outstanding balance as of the beginning of the loan’s year. The loan agreement was signed on March 31, 2020, and provided that both principal and interest would be paid only once a year on March 31.

During March, the girls searched for an appropriate location for the new restaurant. Mackenzie negotiated a lease agreement for approximately 2,000 square feet of retail space at a rate of $1,200 per month. The agreement ran for six years, with an option to renew for five more years. The landlord agreed to give the girls two months of free rent on the front end of the lease in order to help the new business survive the critical start-up period. In addition, Sophia arranged to buy a commercial refrigerator, range, and grill for $30,000 in cash, delivered and installed on March 31. This equipment was expected to last five years (per seller’s assessment).

Mackenzie and Sophia also purchased computer hardware with restaurant-specific software already installed, at a cost of $15,000 cash. The girls plan to depreciate this equipment over six years.

Other cash purchases included:

Food preparation equipment	$1,800
Restaurant furniture and fixtures	$2,700

This equipment was expected to have a useful life of three years.

With a desire to have the new restaurant to be fully operational by April 1, Mackenzie and Sophia requested that their landlord allow their carpenter, electrician, painters, and plumbers to begin renovations to the leased location on March 30 and 31. The workers completed the necessary renovations and improvements at a cost of $68,000 in cash. Improvements and renovations would be depreciated over five years.

Answer rating: 100% (QA)

Balance Sheet Seafood Cuisine Inc As of March 31 2020 Assets Cash 149500 Accounts Receivable 0 Inventory 0 Prepaid Expenses 0 Property Plant and Equipment Land 0 Buildings 0 Furniture and Fixtures 270... View the full answer