5. Prepare a full set of financial statements for Madrigal Coffee Company using the trial balance...
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5. Prepare a full set of financial statements for Madrigal Coffee Company using the trial balance prepared above- this means a Balance Sheet as of December 31, 2021, as well as an Income Statement, Statement of Stockholders' Equity and Statement of Cash Flows for the year ended December 31, 2021. Madrigal Coffee Company (MCC) purchases and roasts raw coffee beans from around the world and sells roasted whole and ground coffee to retailers and restaurants. The company began business on November 1, 2020. Beginning Account Balances as of January 1, 2021 are as follows: Cash Inventory (2) January 31 The following transactions took place during the year ended December 31, 2021: (1) January 1 (3) January 31 (4) March 1 (5) March 1 (6) March 31 $29,000 $55,000 (7) April 30 Accounts Payable Common Stock Retained Earnings $17,500 $64,500 $2,000 Madrigal sold 225,000 shares of its common stock to shareholders for $250,000 cash to help in launching MCC. MCC has no par value for its stock. Madrigal hired a VP of operations. Her salary is $3,750 per month. She will start work on February 1 and is paid on the first day of each month for the work performed in the previous month. Her first paycheck will be on March 1 for work performed in February. MCC obtained a $300,000 cash loan from National Bank. The note has a 6.75% annual interest rate and requires monthly interest only payments on the first day of every month beginning on March 1, 2021. The loan is due to be paid in full in two years. Madrigal signed a lease starting on March 1 to rent a warehouse for roasting and storing its coffee beans. The lease calls for monthly rent of $9,500, payable on the first of each month starting March 1. Made its first monthly interest payment to National Bank for the $300,000 loan it obtained in transaction (3). Also made first wage payment to the VP of operations from transaction (2). - Don't forget the rest of the months! MCC purchased roasting equipment, shelving, racks, and a forklift for the warehouse on account for $225,000. This equipment is expected to be usable for 10 years. MCC purchased a general insurance plan that will cover the company for one year from May 1, 2021 through April 30, 2022. The policy cost $35,000 for the year. MCC paid for the policy in cash. (8) June 1 (9) June 15 (10) July 25 (11) August 8 (12) September 1 (13) October 15 (14) October 25 (15) November 7 (16) December 10 (17) December 15 (18) December 31 MCC pays for the equipment purchased in transaction (6) and the $17,500 of accounts payable that it owed from the prior year. Sold 50,000 pounds of roasted coffee to McDugals on account for use in their restaurants for $3.75 per pound. The coffee cost MCC $1.85 per pound to purchase and roast. Purchased 175,000 pounds of coffee from a supplier for $1.65 per pound on account. Signed a contract with Cost Club, a retail chain, to provide them with 25,000 pounds of ground roasted coffee per month at a price of $3.15 per pound for one year, starting on September 1. Cost Club pays for 6 months of the contract up front. The cost of the coffee to MCC is $1.85 per pound. Pays an advertising firm $30,000 to help identify and market to new customers. The contract with the firm is for monthly services lasting one year in length. Sold and delivered 5,000 pounds of ground roasted coffee to Joey's Café at a price of $3.50 per pound. Joey's pays upon delivery. The cost of the coffee to MCC is $1.95 per pound. Made a partial payment of $200,000 on the inventory purchased in transaction (10). Sold and shipped 32,000 pounds of roasted whole coffee to Super Chain, a retailer, for $3.25 per pound on account. The cost of the coffee to MCC was $1.95 per pound. Receive a utility bill for $1,150 which is due and will be paid on January 9, 2022. Paid a $4,750 dividend to shareholders. Ordered 125,000 pounds of raw coffee from a supplier for $1.25 per pound. The coffee will be shipped by the supplier on January 3, 2022. While closing the books for 2021, MCC determines that after significant collection efforts, they are unsure that they will collect the full amount due from McDugals (transaction 9), as no payments have been made since the sale in June and they may need to send the receivable to an outside collection agency. Based on conversations with McDugals, MCC estimates that 25% of the balance due from McDugals is potentially uncollectible. The tax rate for 2021 is 30% per MCC's CPA. Prepare an entry to accrue income taxes that will be payable for the year ended December 31, 2021 for MCC. 5. Prepare a full set of financial statements for Madrigal Coffee Company using the trial balance prepared above- this means a Balance Sheet as of December 31, 2021, as well as an Income Statement, Statement of Stockholders' Equity and Statement of Cash Flows for the year ended December 31, 2021. Madrigal Coffee Company (MCC) purchases and roasts raw coffee beans from around the world and sells roasted whole and ground coffee to retailers and restaurants. The company began business on November 1, 2020. Beginning Account Balances as of January 1, 2021 are as follows: Cash Inventory (2) January 31 The following transactions took place during the year ended December 31, 2021: (1) January 1 (3) January 31 (4) March 1 (5) March 1 (6) March 31 $29,000 $55,000 (7) April 30 Accounts Payable Common Stock Retained Earnings $17,500 $64,500 $2,000 Madrigal sold 225,000 shares of its common stock to shareholders for $250,000 cash to help in launching MCC. MCC has no par value for its stock. Madrigal hired a VP of operations. Her salary is $3,750 per month. She will start work on February 1 and is paid on the first day of each month for the work performed in the previous month. Her first paycheck will be on March 1 for work performed in February. MCC obtained a $300,000 cash loan from National Bank. The note has a 6.75% annual interest rate and requires monthly interest only payments on the first day of every month beginning on March 1, 2021. The loan is due to be paid in full in two years. Madrigal signed a lease starting on March 1 to rent a warehouse for roasting and storing its coffee beans. The lease calls for monthly rent of $9,500, payable on the first of each month starting March 1. Made its first monthly interest payment to National Bank for the $300,000 loan it obtained in transaction (3). Also made first wage payment to the VP of operations from transaction (2). - Don't forget the rest of the months! MCC purchased roasting equipment, shelving, racks, and a forklift for the warehouse on account for $225,000. This equipment is expected to be usable for 10 years. MCC purchased a general insurance plan that will cover the company for one year from May 1, 2021 through April 30, 2022. The policy cost $35,000 for the year. MCC paid for the policy in cash. (8) June 1 (9) June 15 (10) July 25 (11) August 8 (12) September 1 (13) October 15 (14) October 25 (15) November 7 (16) December 10 (17) December 15 (18) December 31 MCC pays for the equipment purchased in transaction (6) and the $17,500 of accounts payable that it owed from the prior year. Sold 50,000 pounds of roasted coffee to McDugals on account for use in their restaurants for $3.75 per pound. The coffee cost MCC $1.85 per pound to purchase and roast. Purchased 175,000 pounds of coffee from a supplier for $1.65 per pound on account. Signed a contract with Cost Club, a retail chain, to provide them with 25,000 pounds of ground roasted coffee per month at a price of $3.15 per pound for one year, starting on September 1. Cost Club pays for 6 months of the contract up front. The cost of the coffee to MCC is $1.85 per pound. Pays an advertising firm $30,000 to help identify and market to new customers. The contract with the firm is for monthly services lasting one year in length. Sold and delivered 5,000 pounds of ground roasted coffee to Joey's Café at a price of $3.50 per pound. Joey's pays upon delivery. The cost of the coffee to MCC is $1.95 per pound. Made a partial payment of $200,000 on the inventory purchased in transaction (10). Sold and shipped 32,000 pounds of roasted whole coffee to Super Chain, a retailer, for $3.25 per pound on account. The cost of the coffee to MCC was $1.95 per pound. Receive a utility bill for $1,150 which is due and will be paid on January 9, 2022. Paid a $4,750 dividend to shareholders. Ordered 125,000 pounds of raw coffee from a supplier for $1.25 per pound. The coffee will be shipped by the supplier on January 3, 2022. While closing the books for 2021, MCC determines that after significant collection efforts, they are unsure that they will collect the full amount due from McDugals (transaction 9), as no payments have been made since the sale in June and they may need to send the receivable to an outside collection agency. Based on conversations with McDugals, MCC estimates that 25% of the balance due from McDugals is potentially uncollectible. The tax rate for 2021 is 30% per MCC's CPA. Prepare an entry to accrue income taxes that will be payable for the year ended December 31, 2021 for MCC.
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Madrigal Coffee Company Balance Sheet As of December 31 2021 Assets Cash 319500 Inventory 250125 Acc... View the full answer
Related Book For
Financial And Managerial Accounting The Basis For Business Decisions
ISBN: 9781260247930
19th Edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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