Clive Anderson is a wealthy businessman just arriving from Manchester, England. As a part of his vision, he is planning to establisha cupcake drive through in Melbourne CBD.On 1 July 2021,after obtaining TFN and ABN, the business is officially opened–Cupcake War.
The nameof the shop is inspired by his favourite TV showon Hulu. In the first year of operation, Cupcake War completed the following transactions. You are an intern in charge of accounting.
1 On 1 July 2021,Clive sold his house in England for $1,000,000 and invest half of them in the Cupcake War.A bank account in that name was opened at Bank of England.
2 On the very next day, Cupcake war hires two bakers and one waiter. The annual salary of bakerand waiter is $50,000 each and $40,000 respectively. Dueto ATO new regulation the salary will be paid annually in advance.
3 On 15 July 2021, Cupcake War signed rental agreement with Real Green real estate to rentan existingBakery shop at the cost of $20,000. Since Cupcake War paid that amount immediately, they received 10% discount from agent.
4 On 1 August 2021,Cupcake War purchases inventory of flour, eggs,packagingand various artificial flavours ingredients worth $100,000. Althoughit is a large order, the suppliers requireCupcake War to pay all of the bills immediately.
5 On 15August 2021, Cupcake War received a massive order from Melbourne Airport as to celebrate the opening of Australian Border. The orders consist of20,000 of Choco-Cake, 50,000 of Berry –Vanilla and 10,000of Banana –Lemon. Each of cupcakecost $2 eachand it costs$1.25 each cupcake.Halfof sales were cash sales; the rest will be due within one year.
6a On 15 of August2021, to cope with a bigger order Cupcake war purchasednew oven for $20,000cash.The useful life is assessed as 10 years. .
6b On 1 September 2021,since the business slowing downCupcake War purchases Facebook and Instagram advertisingvalued at $10,000 for advertisingin both social media.Cupcake war paid this expense using a debitcard from Bank of England.
7 On the same day, 100boxes of biodegradablepackaging were purchased for $50 each.Due to previous order, Cupcake War was given 90 days
8 On 15April 2022, a cupcake eating contest event raised $60,000before deducting costs. The purpose of the event was to enable Cupcake Warto purchasemultiple delivery carsto deliver cupcakes in neighbouring suburbs. The cost of the event was $15,000 which was paid to the venue operator on that day.
9 On 1 June 2022Cupcake War paid the utilities bill for $7,000forwater, gas,and electricity usage.
10 On 30 June 2022, Cupcake Warpurchased a second-hand Holden Colorado for $40,000.Cupcake war takes 5-year loan for half of this purchase. The useful life is assessed as 10 years.
Task1
Prepare the worksheet for Cupcake War.(30marks)
Task 2
Prepare the Income Statement for the year ended 30 June 2022.(15 marks)
Task 3
Prepare the Statement of Financial Position (Balance Sheet) as at 30 June 2022.(15 marks
Task 4
How does the Cupcake War’s profitability and financial position as of 30 June 2022? Ensure you support your answer using calculation (15marks)
