Consider the following financial information for the year ended December 31, 2015 for Henry’s Lobster Shack, a thriving restaurant in Jaco, Costa Rica.

Accounts Payable

$ 166,000

Dividends paid during 2015

$ 39,000

Wages and Taxes payable

120,000

Other Liabilities

517,000

Cash balance, Jan. 1/15

84,000

Other Revenues

21,000

Cash balance, Dec. 31/15

94,000

Property and Equipment

1,549,000

Food and Supplies Expense

1,415,000

Restaurant Sales Revenue

3,920,000

Selling and Admin Expenses

235,000

Utilities and Other Expenses

1,104,000

Food and Supply Inventory

87,000

Wages Expense

1,087,000

Notes Payable

235,000

Retained Earnings, Jan 1/15

1,074,000

Other Assets

529,000

Henry’s Contributed Capital

86,000

Prepare a set of financial statements for Henry’s Lobster Shack excluding a Statement of Cash Flow. (13 marks)

Question

Consider the following financial information for the year ended December 31, 2015 for Henry’s Lobster Shack, a thriving restaurant in Jaco, Costa Rica.

Accounts Payable	$ 166,000	Dividends paid during 2015	$ 39,000
Wages and Taxes payable	120,000	Other Liabilities	517,000
Cash balance, Jan. 1/15	84,000	Other Revenues	21,000
Cash balance, Dec. 31/15	94,000	Property and Equipment	1,549,000
Food and Supplies Expense	1,415,000	Restaurant Sales Revenue	3,920,000
Selling and Admin Expenses	235,000	Utilities and Other Expenses	1,104,000
Food and Supply Inventory	87,000	Wages Expense	1,087,000
Notes Payable	235,000	Retained Earnings, Jan 1/15	1,074,000
Other Assets	529,000	Henry’s Contributed Capital	86,000

Prepare a set of financial statements for Henry’s Lobster Shack excluding a Statement of Cash Flow. (13 marks)

Veronica · Accepted Answer

The set of financial statements include the income statement, balance sheet, statement of retained earnings and the cash flow statement.

Balance sheet: This statement provides details of available assets and owed liabilities from investing and financial activities of the business. This statement reveals the financial health of company. So, this statement is also called as Statement of Financial Position. The users could estimate whether the company has enough assets to pay off its liabilities. The main components of balance sheet are assets, liabilities, and stockholders' equity.

Income statement: Income statement is prepared to find out the net operating income during the period.

Statement of retained earnings: The statement of retained earnings is a statement which specifies the amount of retained earnings during a particular period of time. the amount of ending retained earnings is computed by adding the net income to opening retained earnings and subtracting dividend paid.

The set of financial statement excluding cash flow statement for Henry’s Lobster Shack is as follows:

The income statement is as follows:

Henry’s Lobster Shack
Income Statement
for the year ended December 31, 2015
Revenues	$ 21,000
Restaurant Sales Revenue	$ 3,920,000
Total revenues	$ 3,941,000
Expenditure	$ 1,415,000
Selling and administrative expenses	$ 235,000
Utilities and Other Expenses	$ 1,104,000
Wages Expense	$ 1,087,000
Total expenditure	$ 3,841,000

Net income	$ 100,000 (1)

The balance sheet is as follows:

Henry’s Lobster Shack
Balance Sheet
as on December 31, 2015
Assets:
Cash	$ 94,000
Food and Supply Inventory	$ 87,000
Property and Equipment	$ 1,549,000
Other Assets	$ 529,000
Total assets	$ 2,259,000

Liabilities:
Accounts Payable	$ 166,000
Wages and Taxes payable	$ 120,000
Notes Payable	$ 235,000
Other Liabilities	$ 517,000
Total Liabilities	$ 1,038,000
Shareholder's equity
Contributed capital	$ 86,000
Retained Earnings on December 31, 2015	$ 1,135,000 (2)
Total Liabilities and Equity	$ 2,259,000

The statement of retained earnings is as follows:

Henry’s Lobster Shack
Statement of Retained Earnings
for the year ended December 31, 2015

Retained Earnings, Jan 1/15	$ 1,074,000
Add: Net income	$ 100,000 (1)
New retained earnings	$ 1,174,000
less Dividend	$ 39,000
Retained Earnings on December 31, 2015	$ 1,135,000 (2)

Answer

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