Campus Calendars Accounting Activity An enterprising student at a local college

Question

Campus Calendars Accounting Activity An enterprising student at a local college started a business making and selling a calendar, which features pictures of famous students and landmark buildings around campus. The first printing was a sell out in less than a month and new orders continue to be receive d. The founder of this sole proprietorship business, Campus Calendars, is Molly Brown. She has asked for your help to determine if Campus Calendars is a profitable venture. Molly wasn't certain exactly what information you would need, so she provided you with the f items from her on-line checking account. All events occurred during the month of September. ollowing Deposits Made From Molly Loan from Parents $ 500 Calendar Sales $1000 Total Deposits Checks Written: Camera Rental 60 Printing to Famous Students 300 to Molly for repair $ 50 Pizza $ 250 $ 400 $1,750 $ 140 $ 500 $1,450 Total Checks You also made the following notes from your conversations with Molly: On September 1, Molly started the checking account with $250 of her personal The famous students who posed for the calendar agreed to a flat payment of $30 savings and a $500 loan from her parents. each. Some students appeared in more than one month Molly bought pizza for the "crew" after some of the photo sessions and planning meetings, which total to $140 Molly's car broke down during the month, so she used $50 from the business checking account to get the car fixed A local copy shop printed the color calendars for $4.00 each based on a minimum order of 100 calendars. When the first printing was a success, Molly paid back her parents in order to demonstrate the profitability of the business.

Explanation / Answer

Balance Sheet at September 1 Capital/Liabilities Amount Assets Amount Capital 250 Cash 750 Loan from Parents 500 750 750 Income statement for September ending 30 Expenses Amount Income Amount Camera Rental 60 Calendar Sales 1000 Printing 400 Famous students 300 Repair 50 Pizza 140 Net Profit 50 1000 1000 Statement of retained earnings Opening Balance 250 Net Profit 50 Closing retained earnings 300 Balance Sheet Capital/Liabilities Amount Assets Amount Capital and Retained earnings 300 Cash 300 Since net profit is 50, it is profitable 3. Expenses incurred for-- Pizza can be considered as business expense since it is incurred for crew of business and during business hours. Car repair should be considered as personal expense because it is not business assets.

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