You have a small business that you started at the beginning of the year. You sell ham and cheese sandwiches for $1 per sandwich. You have located yourself in downtown Manhattan, where there

Accounting Homework

ASSIGNMENT

Watch the accounting lecture series on YouTube first.

!! SUBMIT THE ANSWER SHEET ONLY !!

SCORING RUBRIC (out of 50 points)

QUESTION 1 (15 points)

Did the student answer correctly (3 points per question)? ______

QUESTION 1 (35 points)

# correct answers for balance sheet (up to 12 pts) ________

# correct answers for income statement (up to 13 pts) _______

# correct answers for cash flow statement (up to 10 pts; 10 cash items) _______

!! SUBMIT THE ANSWER SHEET ONLY !!

HOMEWORK QUESTIONS

QUESTION 1

You have a small business that you started at the beginning of the year. You sell ham and cheese sandwiches for $1 per sandwich. You have located yourself in downtown Manhattan, where there is a lot of foot traffic. You are now in week 6 of business. Explain how the following 5 transactions that will happen in week 6 will affect the three financial statements. I provide you with an example below; please report in the same format. Please also provide sign (+ or -). Assume an accounting period of 1 week.

EXAMPLE TRANSACTION: You pay off $10 of notes payable plus $1 in interest.

QUESTION 2

You start an ice cream business and this is what you do in your first week (all of the below occurs during week 1):

·         You invest $5 in your ice cream selling business

·         You get a $25 loan from the bank.

·         You go to the grocery store to buy half-and-half, heavy cream, eggs, vanilla sugar, and vanilla extract. You buy enough to make 40 scoops. Your total cost is $20. You pay $10 in cash and $10 is charged to your account at the grocer.

·         You make a batch of ice cream for 20 scoops.

·         You sell the 20 scoops at $1 each. You receive cash for 10 scoops and the other 10 scoops are purchased by your customers using store credit.

·         You repay $10 of the bank loan.

·         The banker charges you $1 in interest (cash).

·         The neighbors where you have your ice cream stand ask you to buy an insurance policy. The insurance agent offers you a three-year policy which costs $3 payable in advance.

·         You purchase an ice cream stand for $8. You also buy a tiny patch of land from a friend’s family for $2. You pay for the stand and the land with cash. You depreciate the ice cream stand $1/week including for your first week of business.

·         A customer pays $4 for four scoops he bought on credit.

·         You pay $5 towards the credit you had at the store for the ingredients.

Please fill out a balance sheet, income statement, and cash flow statement (templates on the next pages).

FILL YOUR FINAL ANSWER OUT ON THE ANSWER SHEET!

BALANCE SHEET TEMPLATE

INCOME STATEMENT TEMPLATE

CASH FLOW STATEMENT TEMPLATE

Write out the origins of each box e.g. $8 A/R, $2 interest etc.

Put any investment you do in your own business under “beginning cash”.

Explicitly mention sign (+ or -)!