Kenley Ryan, the owner of Kenley’s Resort and Country Club, has hired you to prepare the income statement for the year ending December 31, 2020.  She has provided you with the following information and has requested you follow the format established in the USASH.   Account Account   Balance Insurance (Fire) ? Rooms department – salaries and wages 90,000 Food department – salaries and wages 60,000 Supplies and other – food department 20,000 Food purchases 60,000 Room sales 525,000 Interest income ? Interest   expense 30,000 Cost of food sold ? Food sales 275,000 Administrative and General – salaries and wages 60,000 Information & Telecommunications – other expenses 12,000 Advertising 12,000 Management Fee ? Maintenance - contract 40,000 Depreciation 40,000 Amortization 5,000 Power and Lights 15,000 Supplies and other – room department 30,000 Property taxes 15,000 Franchise Fee 21,450 Administrative   & General – other expenses 15,000   Additional Information: The Resort invested $25,000 in the Delaware National Bank earning 8 percent on July 1st. The beginning and ending food inventories were $6,000 and $5,000, respectively.  Food consumed by the food and rooms department employees during the year free of charge totaled $400 and $600 respectively. Fringe benefits and payroll taxes for all employees, excluding free food were 20% of gross salaries and wages. The Resort pays an average tax rate of 35%. The management fee is 4% of net room sales and 5% of total income after undistributed operating expenses. Fire insurance was purchased on June 15, 2019 for a two year period of coverage from July 1, 2019 through June 30, 2021.  The two year premium was $24,000. Sold some equipment with a book value of $6,000 for $3,000.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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  1. Kenley Ryan, the owner of Kenley’s Resort and Country Club, has hired you to prepare the income statement for the year ending December 31, 2020.  She has provided you with the following information and has requested you follow the format established in the USASH.

 

Account

Account   Balance

Insurance (Fire)

?

Rooms department – salaries and wages

90,000

Food department – salaries and wages

60,000

Supplies and other – food department

20,000

Food purchases

60,000

Room sales

525,000

Interest income

?

Interest   expense

30,000

Cost of food sold

?

Food sales

275,000

Administrative and General – salaries and wages

60,000

Information & Telecommunications – other expenses

12,000

Advertising

12,000

Management Fee

?

Maintenance - contract

40,000

Depreciation

40,000

Amortization

5,000

Power and Lights

15,000

Supplies and other – room department

30,000

Property taxes

15,000

Franchise Fee

21,450

Administrative   & General – other expenses

15,000

 

Additional Information:

  1. The Resort invested $25,000 in the Delaware National Bank earning 8 percent on July 1st.
  2. The beginning and ending food inventories were $6,000 and $5,000, respectively.  Food consumed by the food and rooms department employees during the year free of charge totaled $400 and $600 respectively.
  3. Fringe benefits and payroll taxes for all employees, excluding free food were 20% of gross salaries and wages.
  4. The Resort pays an average tax rate of 35%.
  5. The management fee is 4% of net room sales and 5% of total income after undistributed operating expenses.
  6. Fire insurance was purchased on June 15, 2019 for a two year period of coverage from July 1, 2019 through June 30, 2021.  The two year premium was $24,000.
  7. Sold some equipment with a book value of $6,000 for $3,000.
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