g). Problem 20 Cnartan started a mobile ice cream service on January 2, 20X5, depositing $10,000 of her unds in a bank account in the name of Spartan Mobile Ice Cream. She purchased a fully auipped truck and operated the business on a cash accounting basis for the first year. She provided you with the following information: 1. She purchased a $30,000 fully equipped truck in early January that is depreciable at 25 percent per year. She paid $5,000 cash and financed $25,000 on a note at 6 percent interest. 44 Chapter 1 ot irithoviril 2. She has $8,000 cash in the bank at the end of the year. * Fier receipts for cash purchases of ice cream total $20,000. * The value of her ice cream inventory at the end of the year is $500. 5. She paid $1,500 cash for all truck operating costs. In addition, she has an unpaid invoice for a recent equipment repair in the amount of $400. She paid $1,500 of interest on the loan and $2,000 to reduce the loan balance. 6. 7. She took $1,500 a month from the business for twelve months to live on. For simpliih purposes treat this as wages expense. 8. She purchased $500 of supplies with cash during the year and has $100 on hand at the end of the year. 9. On October 30, she invested $5,000 in a ninety-day certificate of deposit (an investment). Jill admitted she kept no record of the cash sales made during the year. Required: 1. Determine the cash sales for 20X5. 2. Prepare a simple income statement for 20X5 based on accrual accounting.
g). Problem 20 Cnartan started a mobile ice cream service on January 2, 20X5, depositing $10,000 of her unds in a bank account in the name of Spartan Mobile Ice Cream. She purchased a fully auipped truck and operated the business on a cash accounting basis for the first year. She provided you with the following information: 1. She purchased a $30,000 fully equipped truck in early January that is depreciable at 25 percent per year. She paid $5,000 cash and financed $25,000 on a note at 6 percent interest. 44 Chapter 1 ot irithoviril 2. She has $8,000 cash in the bank at the end of the year. * Fier receipts for cash purchases of ice cream total $20,000. * The value of her ice cream inventory at the end of the year is $500. 5. She paid $1,500 cash for all truck operating costs. In addition, she has an unpaid invoice for a recent equipment repair in the amount of $400. She paid $1,500 of interest on the loan and $2,000 to reduce the loan balance. 6. 7. She took $1,500 a month from the business for twelve months to live on. For simpliih purposes treat this as wages expense. 8. She purchased $500 of supplies with cash during the year and has $100 on hand at the end of the year. 9. On October 30, she invested $5,000 in a ninety-day certificate of deposit (an investment). Jill admitted she kept no record of the cash sales made during the year. Required: 1. Determine the cash sales for 20X5. 2. Prepare a simple income statement for 20X5 based on accrual accounting.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:g).
Problem 20
Cnartan started a mobile ice cream service on January 2, 20X5, depositing $10,000 of her
unds in a bank account in the name of Spartan Mobile Ice Cream. She purchased a fully
auipped truck and operated the business on a cash accounting basis for the first year.
She
provided you with the following information:
1. She purchased a $30,000 fully equipped truck in early January that is depreciable at
25 percent per year. She paid $5,000 cash and financed $25,000 on a note at 6 percent
interest.
Transcribed Image Text:44 Chapter 1 ot irithoviril
2. She has $8,000 cash in the bank at the end of the year.
* Fier receipts for cash purchases of ice cream total $20,000.
* The value of her ice cream inventory at the end of the year is $500.
5. She paid $1,500 cash for all truck operating costs. In addition, she has an unpaid
invoice for a recent equipment repair in the amount of $400.
She paid $1,500 of interest on the loan and $2,000 to reduce the loan balance.
6.
7. She took $1,500 a month from the business for twelve months to live on. For simpliih
purposes treat this as wages expense.
8. She purchased $500 of supplies with cash during the year and has $100 on hand at the
end of the year.
9. On October 30, she invested $5,000 in a ninety-day certificate of deposit (an investment).
Jill admitted she kept no record of the cash sales made during the year.
Required:
1. Determine the cash sales for 20X5.
2. Prepare a simple income statement for 20X5 based on accrual accounting.
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