Foundations of Accounting

Written Home Assigment Series 1

Assets and Liabilities
By
TAMÁS GOMBOS
Description of Business:
It is an exclusive restaurant dedicated for gourmand people who likes
both quality food and wine. The restaurant is called ’Silver Spoon’ and
located in the Andrássy Avenue which is an iconic boulevard in
Budapest, the capital of Hungary – this gives the benchmark of the
cousine.
The prices are quite high comparing with the local average, but it is
based on foreign tourists, business people and inland upper-class. Our
chefs only use top quality ingredients and selected chateau wines, thus we
are able to satisfy their criteria. Our menu is formed on different seasons
and its component availability so it is transforming about every second
months, which makes the bistro special.
It is a medium size business with twenty-three workers in it. (head chef,
sous-chef, waiter/waitress staff, shift manager, senior manager, general
manager, etc.)
Equity is the ownership of the business. Therefore the most common
form for it is stock. Stockholder’s equity represents the remaining interest
in assets of the company, spread among individual shareholders.

Summary of Resources:
I would like to give a bit more detailed explanation on inventory section
of assets side of the balance sheet:
The raw foods (including animal resources and vegetables, fruits as well)
give one forth of the inventory values. Three – forth of stock is the value
of bottled wines and spirits: wines sets about 60% of the hole inventory,
because of its top quality from around the world’s best vineyards
(California, New Zealand, Australia, Italy, Bordeaux in France, Spain and
even Chile as well)
You can a find a pretty big number above Leasehold Improvements. Its
simply because of the location of this 19th century first floor estate rented
in Andrássy Avenue next door to Oprah House. We spent about one-
million euro on renovation and decoration, but on the other hand it will
attribute to producing revenue to our business.
It is important to say that even the GIFT CERTIFICATE is a liability
because the restaurant owes someone a meal/dinner at a future date.
 SILVER SPOON
Balance Sheet at March 31, 20X0
ASSETS:
CURRENT ASSETS €
Cash Checking 800
Cash Payroll 2,500
Cash in Bank 10,000
TOTAL (cash) 13,300
         
VISA receipt 10,500
House Accounts 15,000
Prepaid Expenses 10,000
  35,500
INVENTORY
Food 70,000
  Wine 150,000
Liquor 35,000
TOTAL INVENTORY 255,000

TOTAL CURRENT ASSETS 303,800

FIXED ASSETS
  Furniture, Equipment and Interior 215,000
  Leasehold Improvements 1,000,000
 
 1,215,000
  Accumulated Depreciation (140,000)
 

NET FIXED ASSETS

1,075,000
 
OTHER ASSETS
  Security Deposits 20,000
  Liquor License 5,100
TOTAL OTHER ASSETS 25,100
 

TOTAL ASSETS
1,403,900

 
LIABILITIES:
 
CURRENT LIABILITIES  
Accounts Payable 150,000
Wages 20,000
Income Taxes 5,000
Payroll Taxes 15,000
Gift Certificates (payable) 16,000

TOTAL CURRENT LIABILITIES

206,000
 
Long-Term Loan (Notes Payable) 600,000

TOTAL LIABILITIES
806,000
 
STOCKHOLDERS' EQUITY
 
Capital Stock 1,000
Paid In Capital 220,000
Retained Earnings 86,900
 
Net Income 290,000
TOTAL STOCKHOLDERS' EQUITY 597,900
 
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY 1,403,900