Assume an accounting period of 1 week. You start a lemonade business and this is what...
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Assume an accounting period of 1 week. You start a lemonade business and this is what you do in your first week (all of the below occurs during week 1): You invest $30 in your lemonade business. You get a $30 loan from the bank. You go to the grocery store to buy lemons and sugar. Your ingredients can make 80 glasses of lemonade. Your total cost is $40. You pay $20 in cash and $20 is charged to your account at the grocer. Your brother makes a batch of lemonade for 40 glasses and charges $2 in labor (cash). You sell the 40 glasses at $1 each. You receive cash for 20 glasses and the other 20 glasses are purchased on account. • You repay $15 of the bank loan. The banker wants $2 in interest (cash). The neighbors where you have your lemonade stand ask you to buy an insurance policy. The insurance agent offers you a ten-week policy for the summer which costs $10 payable in advance (you have to pay for the entire policy in cash now, but you only expense one week in this accounting period). You purchase a lemonade stand for $25. You also buy a tiny patch of land from a friend's family for $5. You pay for the stand and the land with cash. You depreciate the lemonade stand $2/week including this week. A customer pays $5 for five glasses he bought on account. Please fill out an ending balance sheet, income statement, and cash flow statement for this week. BALANCE SHEET (ACCRUAL METHOD) ASSETS LIABILITIES CASH ACCOUNTS PAYABLE ACCOUNTS RECEIVABLE NOTES PAYABLE RAW MATERIALE INVENTORY TOTAL LIABILITIES FINISHED GOODE OWNER'S EQUITY PREPAID EXPENSE ORIGINAL INVESTMENT FIXED ASSET RETAINED EARNINGS EARNINGS WEEK TO DATE TOTAL OWNER'S EQUITY TOTAL LIABILITIES + OWNERS EQUITY TOTAL ASSETS INCOME STATEMENT (ACCRUAL METHOD) INCOME STATEMENT Begin: Monday AM. End: Sunday PM SALES Beginning inventory $4 +Purchases +Labor Total available for sale $1 -Ending inventory -COST OF GOODS SOLD GROSS PROFIT = EXPENSES = TOTAL EXPENSES NET PROFIT %24 YOUR NAME: CASH FLOW STATEMENT TEMPLATE (DIRECT METHOD) OPERATING CASH FLOW COLLECTIONS INVENTORY PAID SG+A PAID INTEREST PAID TAXES PAID TOTAL OPERATING CASH FLOW INVESTING CASH FLOW FIXED ASSET INVESTMENTI DIVESTMENT OTHER INVESTMENTS TOTAL INVESTING CASH FLOW FINANCING CASH FLOW PAID IN/PAID OUT (e.g. stock issued) DIVIDENDS BORROWIPAYBACK TOTAL FINANCING CASH FLOW BEGINNING CASH NET CHANGE IN CASH ENDING CASH 3. %24 Assume an accounting period of 1 week. You start a lemonade business and this is what you do in your first week (all of the below occurs during week 1): You invest $30 in your lemonade business. You get a $30 loan from the bank. You go to the grocery store to buy lemons and sugar. Your ingredients can make 80 glasses of lemonade. Your total cost is $40. You pay $20 in cash and $20 is charged to your account at the grocer. Your brother makes a batch of lemonade for 40 glasses and charges $2 in labor (cash). You sell the 40 glasses at $1 each. You receive cash for 20 glasses and the other 20 glasses are purchased on account. • You repay $15 of the bank loan. The banker wants $2 in interest (cash). The neighbors where you have your lemonade stand ask you to buy an insurance policy. The insurance agent offers you a ten-week policy for the summer which costs $10 payable in advance (you have to pay for the entire policy in cash now, but you only expense one week in this accounting period). You purchase a lemonade stand for $25. You also buy a tiny patch of land from a friend's family for $5. You pay for the stand and the land with cash. You depreciate the lemonade stand $2/week including this week. A customer pays $5 for five glasses he bought on account. Please fill out an ending balance sheet, income statement, and cash flow statement for this week. BALANCE SHEET (ACCRUAL METHOD) ASSETS LIABILITIES CASH ACCOUNTS PAYABLE ACCOUNTS RECEIVABLE NOTES PAYABLE RAW MATERIALE INVENTORY TOTAL LIABILITIES FINISHED GOODE OWNER'S EQUITY PREPAID EXPENSE ORIGINAL INVESTMENT FIXED ASSET RETAINED EARNINGS EARNINGS WEEK TO DATE TOTAL OWNER'S EQUITY TOTAL LIABILITIES + OWNERS EQUITY TOTAL ASSETS INCOME STATEMENT (ACCRUAL METHOD) INCOME STATEMENT Begin: Monday AM. End: Sunday PM SALES Beginning inventory $4 +Purchases +Labor Total available for sale $1 -Ending inventory -COST OF GOODS SOLD GROSS PROFIT = EXPENSES = TOTAL EXPENSES NET PROFIT %24 YOUR NAME: CASH FLOW STATEMENT TEMPLATE (DIRECT METHOD) OPERATING CASH FLOW COLLECTIONS INVENTORY PAID SG+A PAID INTEREST PAID TAXES PAID TOTAL OPERATING CASH FLOW INVESTING CASH FLOW FIXED ASSET INVESTMENTI DIVESTMENT OTHER INVESTMENTS TOTAL INVESTING CASH FLOW FINANCING CASH FLOW PAID IN/PAID OUT (e.g. stock issued) DIVIDENDS BORROWIPAYBACK TOTAL FINANCING CASH FLOW BEGINNING CASH NET CHANGE IN CASH ENDING CASH 3. %24
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