PROJECT PART 1:ALABAMA BARBECUED CHICKEN
On January 3, 2013 Mandy MacMahaninvested $500,000 to open her first restaurant Alabama Barbecued Chicken in her hometown in Alabama. Her town is known to be a trucker stop and a tourist destination as it has several antique and preserved landmarks since the American Civil War in the 1800s. Business has been a'booming for Mandy as her chicken is halal and recipes are locally recognized. Mandy plans to open new restaurants and start a franchise in the near future, so she hired your firm to "do 'dem accountin'."
Requirements
- Create a work sheet recording the following list of transactions in a spreadsheet program.
- Draft an income statement, statement of cash flows, and balance sheet for year-ended December 31, 2013.
Transactions
January
1. Mandy MacMahan puts $500,000 into Alabama Barbecued Chicken (ABC).
2. ABC borrows $250,000 from the bank payable in five annual installments starting January of next year. There is no interest.
3. ABC purchases a run-down restaurant in the middle of nowhere for $200,000. The purchase includes a restaurant, land, and a shack with a john. If ABC sold each item individually, the restaurant can be sold for $125,000, the land can be sold for $150,000, and no one is willing to buy the shack with a john.
4. ABC demolishes the shack with a john for $500. The john, worth $0, is installed as the restaurant's only toilet.
5. ABC renovates the restaurant for operational use costing $100,000. The renovation has extended the run-down restaurant's useful life from zero to 25 years.
6. ABC purchases a 10-year operational permit from the government for $5,000.
7. ABC purchases kitchen equipment costing $40,000, dining amenities costing $20,000, and decorations costing $10,000. The kitchen equipment is expected to last for 10 years, dining amenities can last 20 years, and decorations can last 5 years.
8. ABC hires five employees paid an average of $4,000 a week.
9. ABC begins advertising the restaurant through billboards, newspapers, and radio for a total of $5,000.
February
1. The restaurant opens its doors on the first day of the month.
2. Total sales for the entire month were $90,000. All sales are in cash.
3. For the entire month, ABC purchased ingredients on account costing $40,000.
4. ABC used $35,000 of its ingredients by the end of the month.
March
1. For the entire month, ABC purchased ingredients on account costing $50,000.
2. Total sales for the entire month were $100,000.
3. ABC used $55,000 of its ingredients by the end of the month.
4. ABC paid its employees and suppliers for the previous month.
April
1. For the entire month, ABC purchased ingredients on account costing $60,000.
2. Total sales for the entire month were $80,000.
3. ABC used $40,000 of its ingredients by the end of the month.
4. ABC paid its employees and suppliers for the previous month.
5. A freak accident occurred in the restaurant's parking lot where an unknown man screaming the name Walter died by a vehicular explosion.The culprit has not been found and will probably not be found. The restaurant is uninsured and cost $20,000 to repair.
6. Insurance was purchased at the end of the year that costs $10,000 a month payable every March and September.
May
1. For the entire month, ABC purchased ingredients on account costing $50,000.
2. Total sales for the entire month were $85,000.
3. ABC used $40,000 of its ingredients by the end of the month.
4. ABC paid its employees and suppliers for the previous month.
5. Some college students stopped by the restaurant on the road trip and complained about the lack of toilets. $20,000 was spent to expand the only restroom into two restrooms.
June
1. For the entire month, ABC purchased ingredients on account costing $50,000.
2. Total sales for the entire month were $80,000.
3. ABC used $45,000 of its ingredients by the end of the month.
4. ABC paid its employees and suppliers for the previous month.
5. Some unused ingredients purchased some time ago were forgotten and became a breeding ground for cockroaches. All ingredients were disposed of.
July
1. For the entire month, ABC purchased ingredients on account costing $40,000.
2. Total sales for the entire month were $85,000.
3. ABC used $40,000 of its ingredients by the end of the month.
4. ABC paid its employees and suppliers for the previous month.
5. ABC spent $10,000 for advertising and coupons.
August
1. For the entire month, ABC purchased ingredients on account costing $50,000.
2. Total sales for the entire month were $90,000.
3. ABC used $45,000 of its ingredients by the end of the month.
4. ABC paid its employees and suppliers for the previous month.
5. Some archaeologists paid ABC $5,000 to survey the land.
September
1. For the entire month, ABC purchased ingredients on account costing $70,000.
2. Total sales for the entire month were $100,000.
3. ABC used $55,000 of its ingredients by the end of the month.
4. ABC paid its employees and suppliers for the previous month.
5. The archaeologists from last month notified ABC that the restaurant is on an ancient burial ground. ABC sees this as an opportunity and develops a tourist attraction and gift shop attached to the restaurant for $100,000. The gift shop sells the restaurant's discarded chicken bones.
October
1. For the entire month, ABC purchased ingredients on account costing $60,000.
2. Total sales for the entire month were $120,000.
3. ABC used $70,000 of its ingredients by the end of the month.
4. ABC paid its employees and suppliers for the previous month.
5. The tourist attraction segment made $5,000 in ticket and gift shop sales.
November
1. For the entire month, ABC purchased ingredients on account costing $65,000.
2. Total sales for the entire month were $125,000.
3. ABC used $50,000 of its ingredients by the end of the month.
4. ABC paid its employees and suppliers for the previous month.
5. The tourist attraction segment made $30,000 in ticket and gift shop sales.
December
1. For the entire month, ABC purchased ingredients on account costing $75,000.
2. Total sales for the entire month were $155,000.
3. ABC used $70,000 of its ingredients by the end of the month.
4. ABC paid its employees and suppliers for the previous month.
5. The tourist attraction segment made $50,000 in ticket and gift shop sales.
6. Mandy MacMahan gave $10,000 in cash to each employee as a gift.
7. The archaeologists filed a complaint against the restaurant and the local government is suing the restaurant for punitive damages of $250,000 for falsely advertising chicken bones as the tourist attraction's bones and refunding all past sales related to the tourist attraction and gift shop. ABC has not been able to find a lawyer and is assuming the worst.