Bus 251E1(12-1)HomeworkSolutions (3)

Bus 251E1(12-1)HomeworkSolutions (3) - Beedie School of...

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Beedie School of Business Simon Fraser University Bus 251 E1 (12-1) Solution to Homework Questions 1-37 a. A Slice of Life Statement of Earnings For the month of November, 2xxx Sales $23,870 Cost of ingredients used $7,130 Employee wages 5,120 Rent 1,200 Electricity 670 Water 420 Telephone 220 Total Expenses 14,760 Net Earnings $ 9,110 b. Other costs that Jason might have incurred in November not listed above include: 1. Depreciation of kitchen facilities and equipment 2. Income taxes 3. Depreciation of pizza delivery vehicles 4. Other employee benefit costs such as employer portion of CPP and EI 1-40 a. Item Classification Supply of ingredients Asset Wages owed Liability Bank loan owed to the bank Liability Cash held in chequing account Asset Cost of ovens & refrigerators Asset Prepaid rent for December Asset Common shares Shareholders’ equity Retained Earnings Shareholders’ equity
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1-40 (continued) b. A Slice of Life Balance Sheet July 31, 2xxx Current assets Current liabilities Cash $ 3,490 Wages owed $ 1,460 Ingredients 670 Non-current liability Prepaid rent 1,200 Bank loan 11,000 Total current $ 5,360 Total liabilities $ 12,460 Shareholders’ equity Non-current assets Common Shares 5,000 Equipment 14,300 Retained Earnings 2,200 7,200 Total Liabilities and Total Assets $ 19,660 Shareholders’ Equity $19,660 c . It is unlikely that Jason will have an account called ‘accounts receivable’ since most of his sales will be on a cash basis. If customers purchased pizza and other food items on credit, then Jason would have an accounts receivable section on his balance sheet that would represent the amount that he is owed from his customers. However, pizza parlours sell products that are relatively inexpensive, therefore most customers, if not all, will have enough funds to pay for their purchase in their wallet, which is why it is unlikely that Jason will have an account called “accounts receivable”. It may be necessary for him to have an accounts receivable account if he has customers that purchase frequently and/or in large quantities, such as a school. In that case, it would be appropriate to ship a large order of pizzas along with an invoice. Until the invoice is paid (by the school for example), the amount owing would be an “accounts receivable”. 1-60 a. All amounts are United States Dollars in Millions i. Total revenues in 2009: $13,157. ii. Total operating expenses in 2009: $8,104. iii. Depreciation and amortization in 2008: $1,249. iv. Income tax expense in 2008: $47. v. Net income in 2009: $1,790. vi. Inventories at the beginning of 2009: $315. vii. Accounts receivable at the end of 2008: $418. viii. Retained earnings at the end of 2009: $15,770. ix. Total long-term debt at the end of 2009: $9,097. x. Cash flows from operating activities in 2009: $3,342.
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xi. Cash payments to acquire property and equipment in 2008: $3,353. xii. Dividends paid in 2009: $314. xiii. Cash used for investing activities in 2009: $3,384.
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This note was uploaded on 02/18/2012 for the course BUSE 237 taught by Professor Sf during the Spring '12 term at Simon Fraser.

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Bus 251E1(12-1)HomeworkSolutions (3) - Beedie School of...

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