Accounting Cycle Project

Accounting Cycle Project - ACCOUNTING 5100 Fall 2009...

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ACCOUNTING 5100 Fall 2009 ACCOUNTING CYCLE PROJECT The following information relates to Farah’s Fresh Bistro, Carryout and Catering. The business was started on January 1, 2008 by Farah Iman who decided to sink her life savings into this venture. Farah decided to incorporate and at the time of incorporation set the par value of the stock at $5 per share. Farah invested $65,000 into the business in exchange for common stock. The company uses the accrual method of accounting and made the following transactions during the months of January and February. Transactions for January: DATE TRANSACTION 1 As the sole investor, Farah Iman, purchased 21,000 shares of $5.00 par value stock in exchange for an investment of $107,000. 1 Farah operates the company out of one large building. The owner of the building informed Farah that he would save $500 per month off the rent if she could pay the rent one year in advance. Farah thought it would be a good deal so she paid the landlord $24,000 for 2008. 1 Purchased kitchen equipment and dining room furniture from Restaurant Supply for $120,000 on the basis of a $20,000 down payment and $10,000 per month for 10 months on credit. Farah signed a promissory note and the first payment is due February 1. 1
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This note was uploaded on 12/25/2009 for the course ACC 5100 taught by Professor Andrews during the Spring '09 term at Wayne State University.

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Accounting Cycle Project - ACCOUNTING 5100 Fall 2009...

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