Reference no: EM133105928
Question - Clive Anderson is a wealthy businessman just arriving from Manchester, England. As a part of his vision, he is planning to establish a cupcake drive through in Melbourne CBD. On 1 July 2021, after obtaining TFN and ABN, the business is officially opened-Cupcake War.
The name of the shop is inspired by his favourite TV show on Hulu. In the first year of operation, Cupcake War completed the following transactions. You are an intern in charge of accounting.
1. On 1 July 2021, Clive sold his house in England for $1,000,000 and invest half of them in the Cupcake War. A bank account in that name was opened at Bank of England.
2. On the very next day, Cupcake war hires two bakers and one waiter. The annual salary of baker and waiter is $50,000 each and $40,000 respectively. Dueto ATO new regulation the salary will be paid annually in advance.
3. On 15 July 2021, Cupcake War signed rental agreement with Real Green real estate to rent an existing Bakery shop at the cost of $20,000. Since Cupcake War paid that amount immediately, they received 10% discount from agent.
4. On 1 August 2021, Cupcake War purchases inventory of flour, eggs, packaging and various artificial flavours ingredients worth $100,000. Althoug hit is a large order, the suppliers require Cupcake War to pay all of the bills immediately.
5. On 15 August 2021, Cupcake War received a massive order from Melbourne Airport as to celebrate the opening of Australian Border. The orders consist of 20,000 of Choco-Cake, 50,000 of Berry -Vanilla and 10,000of Banana -Lemon. Each of cupcake cost $2 each and it costs$1.25 each cupcake. Half of sales were cash sales; the rest will be due within one year.
6a. On 15 of August2021, to cope with a bigger order Cupcake war purchased new oven for $20,000 cash. The useful life is assessed as 10 years.
6b. On 1 September 2021, since the business slowing down Cupcake War purchases Facebook and Instagram advertising valued at $10,000 for advertising in both social media. Cupcake war paid this expense using a debit card from Bank of England.
7. On the same day, 100boxes of biodegradable packaging were purchased for $50 each. Due to previous order, Cupcake War was given 90 days.
8. On 15April 2022, a cupcake eating contest event raised $60,000 before deducting costs. The purpose of the event was to enable Cupcake War to purchase multiple delivery cars to deliver cupcakes in neighbouring suburbs. The cost of the event was $15,000 which was paid to the venue operator on that day.
9. On 1 June 2022Cupcake War paid the utilities bill for $7,000 forwater, gas, and electricity usage.
10. On 30 June 2022, Cupcake War purchased a second-hand Holden Colorado for $40,000. Cupcake war takes 5-year loan for half of this purchase. The useful life is assessed as 10 years.
Required -
Task 1 - Prepare the worksheet for Cupcake War.
Task 2 - Prepare the Income Statement for the year ended 30 June 2022.
Task 3 - Prepare the Statement of Financial Position (Balance Sheet) as at 30 June 2022.
Task 4 - How does the Cupcake War's profitability and financial position as of 30 June 2022? Ensure you support your answer using calculation.