3. State hów telmpuruiy Luhting equation. Problem 9 The Toronto Diner, opened as a sole proprietorship by Felix Fudd, recorded the following hon transactions during its initial month of operations: 1 Rented facilities for $3,000 per month and paid the lessor $9,000 for the first ike months. 2. Purchased equipment costing $30,000 on the first of the month. The diner put 20 per- cent down and borrowed the remainder from Second Bank. (Equipment will be depre- ciated over sixty months using the straight-line method. Assume a $3,000 salvage viivion gniwollat value.) acco homnl 38 Chapter 1 Iiragnin 3. Sold 1,800 meals during the month at an average sales price of $15. Twenty percen of the meals were sold on account, while the remainder were cash sales. None of the charge sales were collected by the end of the first month. 4. Cost of food sold percentage is 30 percent. Food purchases totaled $10,000 durino first month, of which 60 percent were paid for during the month. 5. Paid labor costs of 30 percent of sales during the month. 6. Paid all other expenses, which totaled $6,000, with cash. 7. Felix opened the business on the first of the month by investing $50,000. 8. Felix's tax rate is 30 percent. Taxes will be paid subsequent to the first month. Required: 1. Determine the net income for the first month of business. 2. Determine the total sources and use of cash for the first month.
3. State hów telmpuruiy Luhting equation. Problem 9 The Toronto Diner, opened as a sole proprietorship by Felix Fudd, recorded the following hon transactions during its initial month of operations: 1 Rented facilities for $3,000 per month and paid the lessor $9,000 for the first ike months. 2. Purchased equipment costing $30,000 on the first of the month. The diner put 20 per- cent down and borrowed the remainder from Second Bank. (Equipment will be depre- ciated over sixty months using the straight-line method. Assume a $3,000 salvage viivion gniwollat value.) acco homnl 38 Chapter 1 Iiragnin 3. Sold 1,800 meals during the month at an average sales price of $15. Twenty percen of the meals were sold on account, while the remainder were cash sales. None of the charge sales were collected by the end of the first month. 4. Cost of food sold percentage is 30 percent. Food purchases totaled $10,000 durino first month, of which 60 percent were paid for during the month. 5. Paid labor costs of 30 percent of sales during the month. 6. Paid all other expenses, which totaled $6,000, with cash. 7. Felix opened the business on the first of the month by investing $50,000. 8. Felix's tax rate is 30 percent. Taxes will be paid subsequent to the first month. Required: 1. Determine the net income for the first month of business. 2. Determine the total sources and use of cash for the first month.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:3. State hów telmpuruiy
Luhting equation.
Problem 9
The Toronto Diner, opened as a sole proprietorship by Felix Fudd, recorded the following
hon
transactions during its initial month of operations:
1 Rented facilities for $3,000 per month and paid the lessor $9,000 for the first ike
months.
2. Purchased equipment costing $30,000 on the first of the month. The diner put 20
per-
cent down and borrowed the remainder from Second Bank. (Equipment will be depre-
ciated over sixty months using the straight-line method. Assume a $3,000 salvage
viivion gniwollat
value.)
Transcribed Image Text:acco
homnl
38 Chapter 1 Iiragnin
3. Sold 1,800 meals during the month at an average sales price of $15. Twenty percen
of the meals were sold on account, while the remainder were cash sales. None of the
charge sales were collected by the end of the first month.
4. Cost of food sold percentage is 30 percent. Food purchases totaled $10,000 durino
first month, of which 60 percent were paid for during the month.
5.
Paid labor costs of 30 percent of sales during the month.
6.
Paid all other expenses, which totaled $6,000, with cash.
7. Felix opened the business on the first of the month by investing $50,000.
8.
Felix's tax rate is 30 percent. Taxes will be paid subsequent to the first month.
Required:
1.
Determine the net income for the first month of business.
2.
Determine the total sources and use of cash for the first month.
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