The following information applies to the questions displayed below. Kaylee James

Question

The following information applies to the questions displayed below. Kaylee James, a connoisseur of fine chocolate, opened Kaylee's Sweets in Collegetown on February 1. The shop specializes in a selection of gourmet chocolate candies and a line of gourmet ice cream. You have been hired as manager. Your duties include maintaining the store's financial records. The following transactions occurred in February, the first month of operations. a. Received four shareholders' contributions totaling $27,600 cash to form the corporation; issued 600 shares of $0.10 par value common stock. b. Paid three months' rent for the store at $1,690 per month (recorded as prepaid expenses) c. Purchased and received candy for $6,100 on account, due in 60 days. d. Purchased supplies for $1,430 caslh e. Negotiated and signed a two-year $14,000 loan at the bank, receiving cash at the time f. Used the money from (e) to purchase a computer for $3,250 (for recordkeeping and inventory tracking); used the balance for furniture and fixtures for the store. g. Placed a grand opening advertisement in the local paper for $420 cash; the ad ran in the current month. h. Made sales on Valentine's Day totaling $3,300; $2,725 was in cash and the rest on accounts receivable. The cost of the candy sold was $1,500. i. Made a $610 payment on accounts payable j. Incurred and paid employee wages of $1,100 k. Collected accounts receivable of $110 from customers. I. Made a repair to one of the display cases for $130 cash. m. Made cash sales of $3,200 during the rest of the month. The cost of the candy sold was $2,010.

Explanation / Answer

Income statement Sales 6500 Less: Cost of Good sold 3510 Gross Profit 2990 Operating expenses Advertsing expenses 420 Wages expenses 1100 Repair Expenses 130 Total operating expenses 1650 Net Income 1340

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