The Toronto Diner, opened a sole proprietorship by Felix Fudd, recorded the following transactions during it's first initial month of operations:
1. Rented facilities for $3,000 per month and paid the lessor $9,000 for the first three months.
2. Purchased equipment costing $30,000 on the first of the month. The diner put 20 percent down and borrowed the remainder from Second Bank. (Equipment will be depreciated over 60 months using the straight line med. assume a $3,000 salvage value).
3. Sold 1,800 meals during the first month at an average salsa price of $15. Twenty percent of the meals were sold on an account, while the remainder were cash sales. None of the charge sales were collected by the end of the first month.
4. Cost of food sold percentage is 30%. Food purchases totaled $10,000 during the first month, of which 60 percent were paid for during the month.
5. Paid labor costs of 30% of sales during the month.
6. Paid all other expenses, which totaled $6,000, with cash
7. Felix opened he business on the first of the month by inviting $50,000.
8. Felix's tax rate is 30%. Taxes will be paid subsequent to the first month.
Problem
1. Determine the net income for the first month of the business.
2. Determine the total sources and use of cash for the first month.