Accounting II   © 2008 Arthur Kaliisa
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Assignments for Principles of Accounting II Chapter 1

Assignment One:
Marcos Restaurant specializes in Italian food. During February,
Marcos recorded the following sales to
customers and costs of doing business;

Sales to customers $19,500
Cost of food products used 5,750
Cost of rented building and equipment 4,376
Cost of employee labor services used 3,750
Maintenance and utilities used 2,000

Prepare a schedule that shows the amount of profit (or loss) earned by Marios Restaurant during February.

Assignment Two:
An accounting classmate notes that adherence to GAAP is not required for managerial accounting reports.
She observes, If its so important for financial accounting, it seems reasonable that it would also be useful for managerial reporting
Explain to her why its more important that financial reports adhere to GAAP than it is for managerial accounting reports to do so. In what ways is managerial different from financial accounting?

Assignment Three:

Your friend is puzzled that the topic of contracts has come up in your accounting class. Says he, Contracts are the business of lawyers, not accountants. Why are we studying contracts in an accounting class? Educate your
friend.

Assignment Four:

Pam Lucas is a high school student who delivers papers to earn spending money. During May, she received $450 from customers in payment for their subscriptions for the month. She paid $300 for the papers she delivered.
In addition, she paid $45 to her parents for use of their car to deliver the papers
and she paid $30 for gas

Prepare a statement to compute the amount of profit Pam earned from her paper route in May.

Assignment Five:

The CFO of Flash Bulb and Seed Company has prepared the following projections for the month of August

Expected Sales $480,000

Projected monthly resources consumed:
Rent $85,000
Utilities 2,900
Wages 274,000
Advertising 115,000
Repairs 12,000
Supplies 2,500

Total cost of resources consumed 491,400

Projected loss ($11,400)

Although Flash Bulb and Seed company predicts a loss for August, the CFO is confident that sales will increase in the future.

Required

A.Why is it important that the CFO prepare a document like this?

B.If the company came to your bank requesting a loan, how would you respond? From the data given, does the firm appear that it is likely to be able to repay a loan? Why?