The OYO Abbey Hotel has two operated departments: room and food. The following information is supplied to you as pf December 31, 2020. Account Account Balance Rooms department- salaries and wages EUR 80,000 Food department- salaries and wages EUR 60,000 Supplies and other- food department EUR 20,000 Food purchases EUR 50,000 Rental revenue (lobby space) EUR 10,000 Room sales EUR 380,000 Cost of food sold ? Food sales EUR 175,000 Room- allowances EUR 5,000 Supplies and other- room department EUR 20,000 Other information is as follows: -The beginning and ending inventories of food were EUR 20,000 and 18,000 respectively. Food consumed by the food and A&G department employees during the year (free of charge) totaled EUR 2,000 and EUR 1,000 respectively -Fringe benefits and payroll taxes for all employees, including free food, are 20% of gross salaries and wages. Required: Prepare the top portion- that is, the operated departments section- of the income statement in accordance with the USALI.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
The OYO Abbey Hotel has two operated departments: room and food. The following information is supplied to you as pf December 31, 2020.
|
Account |
Account Balance |
|
Rooms department- salaries and wages |
EUR 80,000 |
|
Food department- salaries and wages |
EUR 60,000 |
|
Supplies and other- food department |
EUR 20,000 |
|
Food purchases |
EUR 50,000 |
|
Rental revenue (lobby space) |
EUR 10,000 |
|
Room sales |
EUR 380,000 |
|
Cost of food sold |
? |
|
Food sales |
EUR 175,000 |
|
Room- allowances |
EUR 5,000 |
|
Supplies and other- room department |
EUR 20,000 |
Other information is as follows:
-The beginning and ending inventories of food were EUR 20,000 and 18,000 respectively. Food consumed by the food and A&G department employees during the year (free of charge) totaled EUR 2,000 and EUR 1,000 respectively
-
Required: Prepare the top portion- that is, the operated departments section- of the income statement in accordance with the USALI.
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