Kaylee James, a connoisseur of fine chocolate, opened Kaylee's Sweets in Collegetown on February 1. The shop specializes in a selection of gourmet chocolate candies and a line of gourmet ice cream. You have been hired as manager. Your duties include maintaining the store's financial records. The following transactions occurred in February, the first month of operations. Received four shareholders' contributions totaling $28,400 cash to form the corporation; issued 500 shares of $0.10 par value common stock. Paid three months' rent for the store at $1,830 per month (recorded as prepaid expenses). Purchased and received candy inventory for $6,400 on account, due in 60 days. Purchased supplies for $1,330 cash. Negotiated and signed a two-year $13,000 loan at the bank, receiving cash at the time. Used the money from (e) to purchase a computer for $2,700 (for recordkeeping and inventory tracking); used the balance for furniture and fixtures for the store. Placed a grand opening advertisement in the local paper for $500 cash; the ad ran in the current month. Made sales on Valentine's Day totaling $4,000; $2,680 was in cash and the rest on accounts receivable. The cost of the candy sold in (h) above was $2,200. (Reminder: Used inventory is an expense called Cost of Goods Sold.) Made a $640 payment on accounts payable. Incurred and paid employee wages of $1,900. Collected accounts receivable of $190 from customers. Made a repair to one of the display cases for $145 cash. Made cash sales of $3,000 during the rest of the month. The cost of the candy sold in (n) above was $1,810. Required: 1 and 2. Record in the T-accounts the effects of each transaction for Kaylee’s Sweets in February, referencing each transaction in the accounts with the transaction letter. 3. Prepare an unadjusted income statement at the end of the first month of operations ended February 28. 5. After three years in business, you are being evaluated for a promotion. One measure is how effectively you managed the sales and expenses of the business. The following data are available: 2025* 2024 2023 Total assets $84,000 $49,500 $35,500 Total liabilities 50,500 21,500 14,500 Total stockholders’ equity 33,500 28,000 21,000 Net sales revenue 95,500 87,000 55,000 Net income 22,200 11,600 5,300 *At the end of 2025, Kaylee decided to open a second store, requiring loans and inventory purchases prior to the store’s opening in early 2026. 5-a. Calculate the net profit margin ratio for each year. 5-b. Do you think you should be promoted?
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Kaylee James, a connoisseur of fine chocolate, opened Kaylee's Sweets in Collegetown on February 1. The shop specializes in a selection of gourmet chocolate candies and a line of gourmet ice cream. You have been hired as manager. Your duties include maintaining the store's financial records. The following transactions occurred in February, the first month of operations.
- Received four shareholders' contributions totaling $28,400 cash to form the corporation; issued 500 shares of $0.10 par value common stock.
- Paid three months' rent for the store at $1,830 per month (recorded as prepaid expenses).
- Purchased and received candy inventory for $6,400 on account, due in 60 days.
- Purchased supplies for $1,330 cash.
- Negotiated and signed a two-year $13,000 loan at the bank, receiving cash at the time.
- Used the money from (e) to purchase a computer for $2,700 (for recordkeeping and inventory tracking); used the balance for furniture and fixtures for the store.
- Placed a grand opening advertisement in the local paper for $500 cash; the ad ran in the current month.
- Made sales on Valentine's Day totaling $4,000; $2,680 was in cash and the rest on
accounts receivable . - The cost of the candy sold in (h) above was $2,200. (Reminder: Used inventory is an expense called Cost of Goods Sold.)
- Made a $640 payment on accounts payable.
- Incurred and paid employee wages of $1,900.
- Collected accounts receivable of $190 from customers.
- Made a repair to one of the display cases for $145 cash.
- Made cash sales of $3,000 during the rest of the month.
- The cost of the candy sold in (n) above was $1,810.
Required:
1 and 2. Record in the T-accounts the effects of each transaction for Kaylee’s Sweets in February, referencing each transaction in the accounts with the transaction letter.
3. Prepare an unadjusted income statement at the end of the first month of operations ended February 28.
5. After three years in business, you are being evaluated for a promotion. One measure is how effectively you managed the sales and expenses of the business. The following data are available:
| 2025* | 2024 | 2023 | |
|---|---|---|---|
| Total assets | $84,000 | $49,500 | $35,500 |
| Total liabilities | 50,500 | 21,500 | 14,500 |
| Total |
33,500 | 28,000 | 21,000 |
| Net sales revenue | 95,500 | 87,000 | 55,000 |
| Net income | 22,200 | 11,600 | 5,300 |
*At the end of 2025, Kaylee decided to open a second store, requiring loans and inventory purchases prior to the store’s opening in early 2026.
5-a. Calculate the net profit margin ratio for each year.
5-b. Do you think you should be promoted?
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