Accounting 381 Lake Street Wine and Dine

November 24, 2022

Accounting 381 Lake Street Wine and Dine

Order Number	636738393092
Type of Project	ESSAY
Writer Level	PHD VERIFIED
Format	APA
Academic Sources	10
Page Count	3-12 PAGES

Instructions/Descriptions

Accounting 381 Lake Street Wine and Dine

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Lake Street Wine and Dine

(13 points)

In May of 2012, Hayley and Ferdinand Chouinard decided to open a restaurant and wine bar in McCall, Idaho, a resort town about 90 miles north of Boise. The Chouinards had been following the growth in McCall for several years and considered it to be an area with great potential for their business. They were especially encouraged by French developer Jean-Pierre Boe’s plans to build Tamarack Resort, which will be located approximately 15 miles from McCall. Construction on the $1.5 billion destination ski and golf resort had begun in early 2012. Tamarack plans to target wealthy national and international vacationers, similar to resorts in Whistler, British Columbia and Vail, Colorado.

In addition to a full-service restaurant and bar, Hayley and Ferdinand plan to have a small retail area to sell a unique selection of wines, cheeses and other related items. They began their search for a location in March and found what they considered to be an ideal space near the recently renovated Hotel McCall and walking distance to Payette Lake.

Pre-Opening Period

Hayley and Ferdinand invested $250,000 of personal funds and decided to call their new business “Lake Street Wine and Dine” (hereafter LSWD). On May 15, 2012 they signed a renewable 24-month lease for the location they desired. The lease required an up front payment for the first six months (covering July through December 2012) at the rate of $7,000 per month, plus an additional $15,000 damage deposit that was non-refundable if the lease was cancelled. While they were allowed to move in on June 1, consider the rental payment to cover the lease period from July 1 to December 31.

The grand opening was scheduled for July 1st and the month of June was used to prepare the facility and purchase retail merchandise and restaurant supplies. The prior tenant had been a Mexican restaurant, so extensive paint and remodeling was necessary in order to create the atmosphere they desired. The cost (all paid in cash) of remodeling the interior space totaled $110,000 and the cost of furnishings was an additional $40,000, including furnishings for the kitchen, bar, and a point of sale computer system. They expected the useful life of the leasehold improvements, furnishings and equipment to be 10 years.

In an effort to attract the Tamarack clientele, Hayley and Ferdinand decided to carry a high-end wine selection along with some northwest favorites, which would differ from those offered in the restaurant. They placed their initial retail wine order with a distributor in early June and their first merchandise arrived June 20th with an invoice for $20,000 payable to the distributor. They also ordered wine that would be served in the restaurant from the same distributor. These shipments of consumable items arrived on the same day with an invoice for $3,500 payable to the distributor. Lastly, they acquired food and supplies for the kitchen from local food distributors for cash payments totaling $3,700.

On June 25th Hayley and Ferdinand reviewed the last minute preparations for opening day as well as where their bank account stood. Hayley was concerned they had two outstanding invoices to suppliers totaling $23,500 and that their cash balance had dwindled down to $39,300. Ferdinand summarized his concerns. “In one month, we have gone through $210,700 and that doesn’t count the outstanding invoices we still owe. We won’t be in business very long at this rate.”

On June 30th, Hayley and Ferdinand consulted with Ann Stamey, a local certified public accountant, on setting up accounting records for LSWD and advice about obtaining additional funding. For example, should they seek other investors or should they try to get a loan? Ann explained that, while their bank balance was declining, they were not losing money; rather they were investing in assets. Even so, they were right to be concerned with the amount of cash remaining. After Ann explained the options of seeking equity versus debt financing, Hayley and Ferdinand decided to seek a loan as protection against cash shortages.

The First Six Months of Operations

On July 1st, they obtained a loan for $400,000 from a local bank, payable at the end of two years with semi-annual interest payments at an annual rate of 10%. Feeling more comfortable about the company’s cash position, Hayley and Ferdinand proceeded with their plans for the grand opening of LSWD.

The Grand Opening event was advertised in the local newspaper and via flyers posted at the other area merchants. The total cost of the advertising for the grand opening was $1,500, which was paid in cash. As planned, on July 1st the doors opened to the public and, as an opening promotion, they had free wine tasting and live music. They estimated the cost of wine for the free tasting to be $1,000. Note that they used wine from the food/wine inventory for the tasting. Friends in a band volunteered to play at the event so no fee was paid for the live music. Given the amount of foot traffic they had received during the day, the opening day seemed like a success. A summary of other events for the first six months of operations follows:

Retail sales for the first six-month period ending December 31, 2012 totaled $140,000. All sales were for cash.
Restaurant sales (including food and wine) totaled $125,000 for the first six-month period ending December 31, 2012. All sales were cash sales.
Between July 1, 2012 and December 31, 2012, LSWD took delivery of retail inventories (i.e., inventories other than food and wine to be served in the restaurant) valued at $42,000. All merchandise was purchased on account. During the six months, LSWD made payments to suppliers in the amount of $50,000.
Between July 1, 2012 and December 31, 2012, LSWD took delivery of restaurant food and wine inventory valued at $92,000. All were paid in cash.
A one-year insurance policy to cover miscellaneous liabilities was purchased on September 1, 2012 for $12,000.
Payment of $7,000 was made on December 20, 2012 to cover January’s rent.
Wages for part-time employees during the six-month period ended December 31, 2012 totaled $32,000. Of that amount, $3,000 was unpaid at December 31, 2012.
Miscellaneous expenses (including Ann Stamey’s consulting fee) totaling $19,000 were paid in cash.
Interest for the first six months was paid December 31, 2012.

Other information:

Inventories on hand at December 31, 2012 for retail merchandise were valued at $15,000 and inventories for restaurant food and wine were valued at $11,000.

Required (the following can be done on the attached worksheets; however, I would recommend completing them in excel.):

Assume the events for the pre-opening period ended June 30, 2012 have been recorded correctly and are reflected in the beginning balances in the T-accounts worksheet provided. Record the events for the first six months of operations ended December 31, 2012 in the T-accounts provided. Note that you will have to add some new accounts. IGNORE TAXES.
Prepare the following financial statements:
Income statement for the six-month period ended December 31, 2012
Balance sheet at December 31, 2012
Does LSWD have a better profit margin on its sales of retail merchandise or on its sales of restaurant food and wine?

Note you may use more than or less than the total number of t-accounts provided.

Due: Tuesday, June 24, 2014

Lake Street Wine and Dine

T-Accounts

Cash

Pre-paid Rent

Rent Deposit

39,300

42,000

15,000

Retail Inventory

Food/Wine Inventory

PP & E

20,000

7,200

150,000

Accounts Payable

23,500

Owner’s Equity

250,000

Lake Street Wine and Dine

T-Accounts

Lake Street Wine and Dine

Income Statement

For six months ended December 31, 2012

Lake Street Wine and Dine

Balance Sheet

At December 31, 2012

EMBED Excel.Sheet.8

PAGE

Lake Street Wine and Dine

T-Accounts

Cash

Pre-paid Rent

Rent Deposit

39,300

42,000

15,000

Retail Inventory

Food/Wine Inventory

PP & E

20,000

7,200

150,000

Accounts Payable

23,500

Owner’s Equity

250,000

Lake Street Wine and Dine

T-Accounts

_1459672339.xls

Sheet1


The Tea Spot
Pre-Opening Balance Sheet
As of June 30, 1999
ASSETS
Cash		9,300
Pre-paid rent		9,000
Deposit		2,000
Merchandise inventory		5,000
Food/supplies inventory		1,900
Property, plant & equipment		19,000
Total Assets		46,200
LIABILITIES AND OWNER’S EQUITY
Accounts payable		6,200
Owner’s equity		40,000
Total liabilities and owner’s equity		46,200
The Tea Spot
Balance Sheet
31-Dec-99
ASSETS
Cash		31,050
Deposit		2,000
Pre-paid insurance		585
Merchandise inventory		4,000
Food/supplies inventory		2,000
Property, plant & equipment		19,000
Accumulated depreciation		(1,900)
Total Assets		56,735
LIABILITIES AND OWNER’S EQUITY
Accounts payable		5,000
Wages payable		200
Notes payable		10,000
Total liabilities		15,200
Owner’s equity		41,535
Total liabilities and owner’s equity		56,735
The Tea Spot
Income Statement
For the six-months ending December 31, 1999
Sales		79,000
Cost of goods sold		(59,000)
Gross margin		20,000
Operating expenses
Rent		10,500
Wages		4,000
Advertising		1,050
Depreciation		1,900
Interest		600
Insurance		415
Total operating expenses		18,465
Net Income		1,535
The Tea Spot
Statement of Cash Flow (Direct)
For the six-months ending December 31, 1999
Operating Activities
Cash from customers		158,000
Cash payments for:
Merchandise	(44,400)
Food supplies	(74,300)
Wages	(7,600)
Advertising	(2,000)
Rent	(3,000)
Insurance	(2,000)
Interest	(1,200)
		(134,500)
Net cash from operating activities		23,500
Investing Activities		0
Financing Activities
Proceeds from note payable		20,000
Net cash flow		43,500
Cash balance July 1,1999		18,600
Cash balance December 31,1999		62,100

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Sheet2

Lake Street Wine and Dine
T-Accounts
Cash		Pre-paid Rent	Rent Deposit
39,300		42,000	15,000
		Retail Inventory	Food/Wine Inventory	PP & E
		20,000	7,200	150,000
Accounts Payable
	23,500
Owner’s Equity
	250,000

Sheet3

_1156662830.xls

Sheet1


The Tea Spot
Pre-Opening Balance Sheet
As of June 30, 1999
ASSETS
Cash		9,300
Pre-paid rent		9,000
Deposit		2,000
Merchandise inventory		5,000
Food/supplies inventory		1,900
Property, plant & equipment		19,000
Total Assets		46,200
LIABILITIES AND OWNER’S EQUITY
Accounts payable		6,200
Owner’s equity		40,000
Total liabilities and owner’s equity		46,200
The Tea Spot
Balance Sheet
31-Dec-99
ASSETS
Cash		31,050
Deposit		2,000
Pre-paid insurance		585
Merchandise inventory		4,000
Food/supplies inventory		2,000
Property, plant & equipment		19,000
Accumulated depreciation		(1,900)
Total Assets		56,735
LIABILITIES AND OWNER’S EQUITY
Accounts payable		5,000
Wages payable		200
Notes payable		10,000
Total liabilities		15,200
Owner’s equity		41,535
Total liabilities and owner’s equity		56,735
The Tea Spot
Income Statement
For the six-months ending December 31, 1999
Sales		79,000
Cost of goods sold		(59,000)
Gross margin		20,000
Operating expenses
Rent		10,500
Wages		4,000
Advertising		1,050
Depreciation		1,900
Interest		600
Insurance		415
Total operating expenses		18,465
Net Income		1,535
The Tea Spot
Statement of Cash Flow (Direct)
For the six-months ending December 31, 1999
Operating Activities
Cash from customers		79,000
Cash payments for:
Merchandise	(22,200)
Food supplies	(37,150)
Wages	(3,800)
Advertising	(1,000)
Rent	(1,500)
Insurance	(1,000)
Interest	(600)
		(67,250)
Net cash from operating activities		11,750
Investing Activities		0
Financing Activities
Proceeds from note payable		10,000
Net cash flow		21,750
Cash balance July 1,1999		9,300
Cash balance December 31,1999		31,050

Lake Street Wine and Dine

T-Accounts

Accounting 381 Lake Street Wine and Dine

RUBRIC

Excellent Quality

95-100%

Introduction

45-41 points

The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.

Literature Support

91-84 points

The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.

Methodology

58-53 points

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Average Score

50-85%

40-38 points

More depth/information is required for the context and importance, otherwise the study detail will be unclear. There is no search history information supplied.

83-76 points

There is a review of important theoretical literature, however there is limited integration of research into problem-related ideas. The review is just partly focused and arranged. There is research that both supports and opposes. A summary of the material given is provided. The conclusion may or may not include a biblical integration.

52-49 points

The content is somewhat ordered, but there is no discernible organization. The use of typeface, color, graphics, effects, and so on may sometimes distract from the presenting substance. It is possible that the length criteria will not be reached.

Poor Quality

0-45%

37-1 points

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75-1 points

There has been an examination of relevant theoretical literature, but still no research concerning problem-related concepts has been synthesized. The review is just somewhat focused and organized. The provided overview of content does not include any supporting or opposing research. The conclusion has no scriptural references.

48-1 points

There is no logical or apparent organizational structure. There is no discernible logical sequence. The use of typeface, color, graphics, effects, and so on often detracts from the presenting substance. It is possible that the length criteria will not be reached.