(Chapter 4: Preparing financial statements)

Beans and Aroma (B&A), a local coffee shop, reports the following financing and investing activities as of June 30, 2021:

The founder started the business with an equity capital contribution of $80,000. In addition, she received a bank loan of $30,000 for 10-years, at an interest rate of 12% per year. The rent for the shop is $2,300 per month. The shop spent $50,000 to purchase coffee-making equipment and $30,000 to obtain inventories. Accounts payable totaled $30,000, stemming entirely from the inventory purchase. The company maintains a checking account having a balance of $60,000 (initial cash balance). Based on the above information, prepare B&As initial balance sheet as of June 30.

Now, prepare B&As income statement as of December 31 using the following information:

Price of each cup of coffee is $5 and the shop sold a total of 36,000 cups of coffee in the first 6 months. The company realized promotional expenses (billboards and other print media) of $25,000 and administrative expenses (owners salary & benefits) of $18,000. Total rent for the shop was $13,800 in the past six months. Depreciation on the $50,000 equipment over six months totaled $5,000. The company reported a total of $110,000 in cost of goods sold (COGS).

Now, lets say, the shop provided several catering services for credit sales, which totaled $30,000. Value of inventories as of December 31 is $45,000. Credit purchase to produce coffee and other snacks and desserts next year has a total of $35,500. Balance on cash and marketable securities has reached $48,000 as of December 31.

Prepare B&As balance sheet as well as statement of cash flow as of December 31. Conduct a break-even analysis and compute the firms survival revenue.

All parts for the problem are showing. Please do not use excel and just do step by step to better understand how set up this problem up especially the all the each financial statement to understand how they all work together.