Reference no: EM132988337
Sam has recently purchased a new cafe and to bring the cafe back to life he injected $450,000 into the business. He kept $200,000 as cash to fund running costs during the transfer of ownership (pay for inventory, wages etc). The remaining $250,000 was used to pay for equipment and shop fittings. These assets have a 6 year life and residual value of $0. The revenue from the following information came from cash registers, and the payments came from the cafes bank account.
Use this information and the figures below to answer the following questions:
Problem a) what is the depreciation of the assets using the straight-line method?
Problem b) what is the total expenses benchmark using the following formula: total expenses/turnover * 100
Problem c) label where each of the figures below would be on the income statement (revenue, fixed cost, variable cost). How will the contribution of $450,000 from the owner appear in the income statement?
Required information:
Sales - $1,639,413
Contribution from owners - $450,000
Payments for inventory - $971,672
Payments for wages - $193,891
Payments for rates and utilities - $21,500
Payment for equipment and fittings - $250,000
Payment for insurance - $34,400
Payment for rent - $210,000
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