After reviewing the business Highlights, create the different accounts and data (figures) of a restaurant(corporation) which can be used to write financial statements that will meet the following requirements as well as the business highlights. Using the created accounts and data, compute a balance sheet for the said restaurant. Requirements 1. The minimum number of accounts need to be as follows: Assets including Contra-assets (9), Liabilities (7), Equity (3, excluding dividends), Revenue (2), and Expenses (9). To compute the financial statements, you will use information in the "Business Highlights" shown below.

HINT in Types of Accounts to include and produce fictional numbers to use for the restaurant. Data needs to meet the requirements of the Business Highlight shown below.

Example of types of accounts (Can add as needed)

a. Asset Accounts

1. Cash
2. Accounts Receivable
3. Inventory
4. Prepaid Expenses
5. Equipment
6. Building

b. Liability Accounts

1. Accounts Payable
2. Accrued Expenses
3. Unearned Revenue
4. Notes Payable
5. Mortgage Payable

c. Equity Accounts

1. Owner's Capital
2. Retained Earnings

d. Revenue Accounts

1. Food Sales Revenue
2. Beverage Sales Revenue
3. Books Sale Revenue

e. Expense Accounts

1. Cost of Goods Sold
2. Wages Expense
3. Rent Expense
4. Utility Expense
5. Depreciation Expense
6. Advertising Expense

2)Compute a 2023 classified balance sheet for the restaurant. Be sure to classify assets into current and long-term assets and classify liabilities into current and long-term liabilities. Business Highlights: A. The business is a corporation and has operated in Southeast Wisconsin since 2016. At the inception, it issued a total of 100,000 shares for $100,000. The par value is set at $0.01 by the company. The business has only one class of stock - common stock. B. The selected restaurant is locally-owned family business. So you cannot rely on the financialstatements of a franchise or national chain restaurant. C. Each line item (account) on balance sheet and income statement is at a high level. Such an account is the aggregate of several sub-ledger accounts. For example, Cash should include checking/savings accounts, CDs, money market account, credit card receipts, cash on hand, and checks received. i. If the balance of an account is comparatively small (e.g., maintenance expense, utilities expense, garbage removal and technology/telecommunication expense), they should be combined into another account and reported. ii. Use only one Inventory account to include all inventory items and 3 Inventory should include food, beverage, and merchandise inventories (if your restaurant sells merchandise). iii. Use Supplies account to include all types of supplies. iv. Use Equipment account to include various types of equipment (e.g., kitchen equipment, vehicle, and computer, etc.). v. Use one Sales Revenue account to include both food and beverage sales. D. Although the business does the best it can to collect from catering customers, it is not always successful. Each year accounts are deemed uncollectable and written off. The restaurant uses the allowance method for dealing with bad debts. Make appropriate assumptions about bad debt and uncollectible account. E. In addition to 100,000 shares issued in 2016, the restaurant later issued additional 100, 000 shares of common stock to a private equity investor in 2023. The stock has a par value of $0.01 with a total value of $500,000. F. The restaurant bought back 10,000 shares of its stock from an investor for $50,000 in 2023. There was no other stock related transaction in the year. G. The restaurant had $150,000 retained earnings and $88,000 cash balance at the beginning of 2023. Its 2023 beginning total assets is $858,000. H. The restaurant has not issued any bonds to the public. I. The restaurant had a profitable year and declared and paid 10% of 2023 year net income as dividend. J. On July 1st, the restaurant borrowed $100,000 from a local bank to finance its purchase of a piece of kitchen equipment in 2023 by issuing a note. The fixed rate loan is due in 2028. The borrowing rate is 10 percent annually and final interest payment is made at the maturity date of the loan. The business has no other note payables. Interest is paid at June 30th every year. K. The restaurant does not loan cash to its officers, employees or outside parties. Neither does it issue stock options to incentivize officers. L. The restaurant does not use factoring to convert accounts receivable to notes receivable. M. It has a catering operation which offers services to two corporate clients. At the end of each quarter, the clients will pay 50% for estimated orders for next quarter 4 in advance to receive a discounted price. N. The restaurant purchased a delivery van for its catering service for $28,000 by paying cash in 2023. O. The restaurant sold an oven for $500 at the end of June. It was purchased for $5,000 and had a book value of $2,000 at the beginning of 2023. The straight line depreciation is used for the equipment with a depreciation rate of $1,000 per year. P. Employees are paid on the 1st of every month for the work that they performed in the preceding month. Q. To provide certainty that business insurance will not expire, the restaurant pays in advance insurance for the subsequent quarter of business. R. The restaurant collects sales taxes for the State and remits that to WI Department of Revenue each quarter. S. The restaurant owes income taxes at both Federal and State level. Income taxes are aggregated into one account for Federal and State. Use 35% as a flat rate for income taxes. T. Ignore employee health, retirement, and workers' compensation benefits for this project. U. All financial statements should be properly formatted with title and body sections.

Answer rating: 100% (QA)

Based on the business highlights provided below are the accounts and data for the restaurant Assets 1 Cash 2 Accounts Receivable 3 Inventory Food Beve... View the full answer