Financial Statements and Ratios for Creative Cakes Year 2

School: Brigham Young University, Idaho - Course: BUS 180 - Subject: Accounting

W11 Practice: Creative Cakes 3 Financial Statements Creative Cakes Financial Statements For the Period of January 1 - June 31, Year 2 Year two Activity This is Creative Cake's second year in business. Purchase $1000 of equipment with note payable in February The owner withdraws $500 cash in June. Assumptions Avg. cake price$ 30 Days Inventory (current mo.) Variable Cost per Cake $ 14 Equip. Life / months Cakes/customer 1.0 Days Receivable Annual growth rate (divide by 12) 9% Days Payable Adverting per Cake$0.50 Profit & Loss Statement Cake Sales in Units29292930 DecJanFebMar Revenue Cake Sales $ 877 $ 883 $ 890 Cost of Goods Sold 409 412 415 Gross Profit $ 467 $ 471 $ 475 Expenses Advertising Cost$ 15 $ 15 $ 15 Depreciation42 42 42 Rent ($250/mo)250 250 250 Internet ($55/mo)55 55 55 Legal Fees ($150 paid in Jan. each year)150 150 150 Total Expenses $ 511 $ 511 $ 511 Net Income $ (44) $ (40) $ (37) STATEMENT OF CASH FLOWS DecJanFebMar Operating Activities Net Income$ (44) $ (40) $ (37) Changes in Cur. Assets and Liabilities Change in Accounts Receivable(0) (1) (1) Change in Inventory (baking supplies)0 (2) (2) Change in Accounts Payable17 0 0

Non-cash expenses Depreciation42 42 42 Cash Flow From Operating Activities$ 16 $ (1) $ 2 Investing Activities Change in Equipment- - - Cash Flow from Investing Activities$ - $ - $ - Financing Activities Change in Notes Payable(100) (100) (100) Change in Paid-in-Capital- - - Change in Owner's Withdrawal- - - Cash Flow from Financing Activities$ (100) $ (100) $ (100) Net Increase/(Decrease) in cash (84) (101) (98) Cash--beginning of month 2,851 2,767 2,665 Cash--end of month $ 2,767 $ 2,665 $ 2,567 Balance Sheet DecJanFebMar Assets Cash$ 2,851 $ 2,767 $ 2,665 $ 2,567 Accounts Receivable146 146 147 148 Inventory (baking supplies) (based on current COGS)205 205 206 208 Equipment1500 1,500 1,500 1,500 Less Accumulated Depreciation-300 (342) (383) (425) Total Assets$ 4,402 4,276 4,135 3,998 Liabilities Accounts Payable (based on Total Exp. - Depr.)421 438 438 439 Notes Payable (pay $100/mo)400 300 200 100 Total Liabilities $ 821 $ 738 $ 638 $ 539 Owners' Equity Paid-in-Capital$ 2,500 $ 2,500 $ 2,500 $ 2,500 Less: Owner's Withdrawal- - - - Retained Earnings1081 1,037 997 960 Total Owner's Equity $ 3,581 3,537 3,497 3,460 Total Liabilities and Owner's Equity $ 4,402 $ 4,276 $ 4,135 $ 3,998