Stan Raza asks your advice in setting up the accounting records for his new business, Stan's Bake Shop. The business will be a bakery and will operate in a rented building. Stan's Bake Shop will need office equipment and baking equipment. The business will borrow money using a note payable to buy the needed equipment. Stan's Bake Shop will purchase on account food supplies and office supplies. Each asset has a related expense account, some of which have not yet been discussed. For example, equipment wears out (amortizes) and thus needs an amortization account. As supplies are used up, the business must record a supplies expense.
The business will need an office manager. This person will be paid a weekly salary of $1,800. Other expenses will include advertising and insurance. Since Stan's Bake Shop will want to know which aspects of the business generate the most and the least revenue, it will use separate service revenue accounts for cupcakes (his specialty!), office catering, and wedding cakes. Stan's Bake Shop's better customers will be allowed to open accounts with the business.
Required
List all the accounts Stan's Bake Shop will need, starting with the assets and ending with the expenses. Indicate which accounts will be reported on the balance sheet and which accounts will appear on the income statement.