Quiz 2 Kaylee’s Sweets

Kaylee James opened Kaylee’s Sweets on January 1, 2016. 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 January, the first month of operations.

• Received four shareholders’ contributions totaling $30,200 cash to form the corporation; issued 400 shares of $0.10 par value common stock.
• Paid three months’ rent for the store at $1,750 per month (two months are prepaid).
• Purchased and received candy for $6,000 on account, due in 60 days.
• Purchased supplies for $1,560 cash.
• Negotiated and signed a two-year $11,000 loan at the bank, receiving cash at the time.
• Used the money from (e) to purchase a computer for $2,750; used the balance for furniture and fixtures for the store.
• Placed a grand opening advertisement in the local paper for $400 cash; the ad ran in the current month.
• Made sales the first two weeks totaling $3,500; $2,675 was in cash and the rest on accounts receivable. The cost of the candy sold was $1,600.
• Made a $550 payment on accounts payable.
• Incurred and paid employee wages of $1,300.
• Collected accounts receivable of $600 from customers.
• Made a repair to one of the display cases for $400 cash.
• Made cash sales of $1,200 for the rest of the month. The cost of the candy sold was $600.

Required

• Record journal entries for each of the transactions.
• Prepare an income statement at the end of the first month of operations ended January 31.
• Prepare a balance sheet as of January 31.
• Write a short memo to Kaylee offering your opinion on the results of operations during the first month of business.
• After three years in business the following data was computed. Based on this information provide a report to Kaylee on the performance of the store.