Pizzeria Shop

Mr. Snelson started his own venture and named it as Pizzeria Shop, Inc. He had started this
venture with great difficulty and somehow managed some funds which he introduced in the
business. The pizza shop specialized in ‘Thin Crust Olive and Broccoli Pizza’, ‘Cheese,
Jalapenos Pizza’, “Green Pepper, Barbecue Sauce Pizza’ and ‘Pepperoni Veggies Pizza’.

There were certain transactions which took place in the month of August 2019, which are given
as follows:

On August 1, Snelson invested $5,000 in the business as owner. On August 1, the firm paid
$750 rent for the month of August and $150 for the month of September. On August 1, the firm
borrowed $4,000 from a bank on a 9 percent note payable, with interest payable monthly and
the principal due in full at the end of two years. An initial inventory of pizza ingredients and
boxes was purchased on credit for $800.
On August 4, Equipment costing $7,200 was purchased for cash. An amount of $20 was
incurred to bring the equipment in the company. The expected life of the equipment was 10
years.
In August pizza sales were $12,000 all for cash.
During August the pizzeria’s employees were paid $3,000 in wages and $50 was yet to be paid.
During the month, an additional $5,750 of ingredients and boxes was purchased on credit.
August sales consumed $6,000 of ingredients and boxes.
At the end of the month, bills for various utilities used in August were received, totaling $450.
During the month, $4,800 of accounts payable was paid.
On August 13, the firm catered a party for a fee of $2000. Because the customer was a friend of
Snelson, the customer was told that payment could be made later in the month.
On August 29, a check was received from Snelson’s friend for the party of August 13.
The firm also received an order for a party which was to take place in September for which an
advance payment of $ 4000 was received.

Mr. Snelson wanted to know whether his company has made profits or losses and the status of
the company. As an accountant prepare the income statement and the balance sheet of the Pizza
Shop, Inc.

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