elites 82 Aocownting: Feat amd Cave + CHELBAOIG EXHIBIT 2 2005 Operating Data for Motels EXHIBIT 1 Cash Register and Che with 40 ar Fewer Units (expressed a Suinmary During 2008 pircentaygerd/total Eig ae Receipts 94 Revenues: From roams 82 a i ea Reem rentals RF From vending machines ; Other revenue 13 Total 5aA4 ice Total revenues Gee = Operating expenses: ecks Drawn a ae SRS eae wners’ drawing Re aOs Administrative and general sept hrc i pan Direct operating expenses Paid to laundry , Hass eae cee Replacement of glasses, bed linens, 1,660 Aaiverl sn ant rae coe Bere Repairs and maintenance Wvertising ; Payroll taxes 2,894 vee See oceans 12205 Fixed expenses: Repairs and maintenance 3,980 Sereeaien ia Cleaning and other supplies 6,820 3 Insurance 2s Telephone 2,789 = Depreciation 125 Electricity 5,611 pr Interest 2 Property taxes 9,870 Rent 28 Insurance 11,584 pel Interest 10, Total es Total 31965 Profit (pretax) ar bank balance has steadily risen, Furthermore, [ have a, local accountant make out the annual income tax state- ments so I don't have to worry about them. That in- Come tax stuff is so complicated that I avoid it.” Mr. Carter worked with the trade journal's figures (Exhibit 2) and the cash summary (Exhibit 1} that ‘evening and quickly found he needed more information. He told Mrs, Kim that he was retuming to the home office the next moming but would be back in two weeks for another visit to the branch plant. Meanwhile, he wanted Mrs. Kim to get together some additional information. Mr. Carter suggested to Mrs. Kim that 40 important noncash e Mr.C xpense was depreciation ‘rier alsa wanted to know about expenses that had been incurred in 2004 but not paid until 2005, He told Mrs. Kim to check up-on wages and salaries, insurance, advertising, taxes, utilities, and any other items paid in 2005 but applicable to 2004, In addition, Mr, Carter instructed Mrs, Kim to uy to find items of expense properly chargeable to 2008 but not paid by December31,2005. Mrs. Kim told Mr, Carter the same types of expe wages and sala ses were, ics, insurance, wolved, that is, advertising, taxes, EXHIBIT 3 Additional Information about the Business Chargeable in 2004 but paid in January 2005: Wages and salaries 3795 Advertising 600 Payroll taxes. ot Fuel for heating 933 Telephone 105 Electricity 360, Property taxes 1,005 Insurance 2,025 Interest 687 Chargeable in 2005 but not paid by December 31, 2005: Wages and salaries 1,128 Advertising 996 Payroll taxes 126 Fuel for heating 840 Cleaning and other supplies 75 Telephone 153 Electricity 492 Property taxes 111d Interest 579. Aso, 2008 deprecation charger of 30.80, Also, 2005 cau eveipts inc hdd a 31,600 puyenec trnn a company that ad ‘od sera driag December 2004 for acount ey here wore no ch uncollected renal asf Deron 31,2008" | | | |and so forth, Also Mr. Carter inquired about income from room rentals. He asked if any of the cash re- ceipts during 2005 related to rentals during 2004 and if therewere any rentals during 2005 that had not been collected. During the two weeks Mr. Carter was back at the home office, Mrs. Kim checked the records and com- piled the additional information requested by Mr. Carter. The evening Mr. Carter returned to the Pinetree Morel, Mrs, Kim gave him a summary of the informa- tion she had gathered (Exhibit 3), With all the additional information, Mr. Carter constructed a 2005 operating Chapter 3 Basic Accounting Concepts: The Income Siaiemen 83 statement that matched in form the one appearing in the trade journal, He calculated both the dollar amounts and percentage composition of each expense for more useful comparison with the journal’s figures. Questions 1. Prepare a 2005 operating statement for the Pinetree Motel such as the one shown in Exhibit 2 dollar amounts and percentages of total 2. As Mr, Carter, what comments W« the Kims regarding the