Exercise: The Ice Cream Store, Inc.

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Exercise The Ice Cream Store, Inc.

• The Ice Cream Store, Inc. incurred the following
  start-up costs
• The Ice Cream Store, Inc. was formed on October
  1, 20XX, with the investment of 90,000 in cash
  by the owners.
• Obtained a bank loan and received the proceeds of
  35,000 on October 2. The cash will be used for
  operations.
• Purchased equipment for 25,000 cash on October
  2.
• Acquired a building at a cost of 80,000. It was
  financed by making a 20,000 down-payment and
  obtaining a mortgage for the balance. The
  transaction occurred on October 2.
• On October 2, the President of the United States
  publicly declared that she will eat (and plug)
  our ice cream while entertaining guests in the
  White House.
• Prepare a transaction analysis of 1. 5. using
  the financial statement effects template

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Ice Cream Shop Balance Sheet
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Ice Cream Shop additional transactions

• On October 4, purchased merchandise inventory
  (i.e., ice cream) at a cost of 15,000 by paying
  5,000 cash and receiving short-term credit for
  the remainder from the supplier.
• Immediately returned some of the ice cream
  because some of the flavors delivered were not
  ordered. The cost of the inventory returned was
  3,000.
• Sales of ice cream for the month of October,
  20XX, totaled 8,000. All sales were for cash.
  The ice cream cost 3,500.
• For all of October, total employee wages and
  salaries earned/paid were 3,000.
• As of the end of October, one month's
  depreciation on the equipment and building was
  recognized -- 383 for the building and 167 for
  the equipment.
• 450 interest expense on the note and mortgage
  was due and paid on October 31. Assume that the
  principal amounts (35,000 60,000) of the note
  and mortgage remain unchanged.
• Prepare a transaction analysis of 6. -11. using
  the balance sheet/income statement template
  presented above

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Prepare the following financial statements
(ignore income taxes) (i) an updated Balance
Sheet as of October 31, 20XX and (ii) an Income
Statement for the month of October 20XX.
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Preparing the Financial Statements
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Balance Sheet and Income Statement
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Statement of Stockholders Equity