Find his income or loss for the first year of operation

Assignment Help Management Theories

Reference no: EM131499227

Question: Joe Fast started a mobile snack food service on January 2, 2006, investing $15,000 cash deposited in a bank account in the name of "Fast Snacks." He purchased a second-hand, fully equipped truck. Joe operated on the cash basis of accounting, and at year's end, he asks you to help him find his income or loss for the first year of operation. You have determined the following:

a. He purchased a used $24,000 truck that is depreciable at 20% per year. He paid $12,000 cash and financed $12,000 on a note at 8% interest.

b. He started the operation with $3,000 cash available.

c. He has $375 cash on hand and $28,454 cash in the bank at the end of the year.

d. His receipts for cash purchases of inventory for resale total $30,280.

e. The value of his ending inventory for resale is $624.

f. He paid $1,024 cash for all truck operating costs. In addition, he has an unpaid invoice for a recent truck repair in the amount of $280.

g. He paid $1,280 of interest on the truck loan. .

h. He informed you that he took $1,625 a month for 12 months to use for living and other personal expenses. You discover Joe kept no record of the cash sales he made during the year.

Cash sales revenue must be determined from the information already noted. Show Joe how cash sales were determined and prepare an income statement using accrual accounting to show his operating income for the year.

Reference no: EM131499227

Questions Cloud

Estimate closing value of the linen inventory : The following transactions occurred for a new motel prior to and during the first month of operations. Study the transactions shown below and record necessary.

Traditional manufacturing to service-sector employment : How has the shift in the US productive sector from traditional manufacturing to service-sector employment been tied to economic incentives?

Develop financial sections of nab companys business plan : Develop the following financial sections of your NAB company's Business Plan. Note: Attach the MS Word document to the discussion thread.

Produce in stage i of production : Why will the farmer choose a zero quantity of wheat rather than produce in Stage I of production?

Find his income or loss for the first year of operation : Joe Fast started a mobile snack food service on January 2, 2006, investing $15,000 cash deposited in a bank account in the name of "Fast Snacks."

Friedmans and freeman and mcveas statements : How do you feel about Friedman's and Freeman and McVea's statements? Explore both sides of the argument in your initial post by providing one argument.

Barrier to entry for new schools and schools : How might the NCAA's academic standards requirements be used as a barrier to entry for new schools and schools that want to break into the top conferences.

Determine the cash sales revenue : Art Angel operated a small seasonal lake marina, renting boats and selling snacks and beverages. He rents marina space for four months in Year 2006.

Task of conducting fiscal policy : Say that for a variety of reasons, the government shows that it is not up to the task of conducting fiscal policy.

User Account

All Pages