The following information summarizes various accounts of the Lefkosa Hotel for the year ended December 31, 2011. 1. Prepare a food department income statement from the following information: Revenue Grill room $153,100 Coffee garden 78,900 Banquets 298,400 Cost of sales, food 211,700 Employee meals 17,200 Salaries and wages 174,400 Employee Benefits 20,000 China and glassware 14,600 Laundry and linen expense 13,000 License expense 1,900 Printing and stationery 4,900 Supplies expense 6,200 2. Using the food department’s operating income from Problem 1. and the following additional information, prepare the hotel’s general income statement. Rooms department, operating income $482,700 Beverage department, operating income 143,600 Telephone department, operating loss 25,100 Miscellenous Income 40,300 Administrative and general expense 174,300 Marketing 83,600 Energy costs 62,000 Property operation and maintenance 74,900 Insurance 5,000 Property taxes 43,100 Interest 65,000 Depreciation 125,700 Income tax 50% of income before tax
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
The following information summarizes various accounts of the Lefkosa Hotel for the year ended December 31, 2011.
1. Prepare a food department income statement from the following information:
Revenue
Grill room $153,100
Coffee garden 78,900
Banquets 298,400
Cost of sales, food 211,700
Employee meals 17,200
Salaries and wages 174,400
Employee Benefits 20,000
China and glassware 14,600
Laundry and linen expense 13,000
License expense 1,900
Printing and stationery 4,900
Supplies expense 6,200
2. Using the food department’s operating income from Problem 1. and the following additional information, prepare the hotel’s general income statement.
Rooms department, operating income $482,700
Beverage department, operating income 143,600
Telephone department, operating loss 25,100
Miscellenous Income 40,300
Administrative and general expense 174,300
Marketing 83,600
Energy costs 62,000
Property operation and maintenance 74,900
Insurance 5,000
Property taxes 43,100
Interest 65,000
Income tax 50% of income before tax
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