Summary of Assessment Method: An Individual Report analysing the financial statements of a food and beverage operation and their implication on the sustainability of the business (1,500 words including figures and tables).
On successful completion of the module, students will be able to:
- Critically analyse the fundamental accounting principles and the applications of the accounting principles in the context of F&B.
- Analyze and interpret the key elements included in the financial statements in the food and beverage industry.
- Justify and assess the importance/application of sustainability in today’s business from perspective of accounting.
“Starting from Scratch”
-Fish & Chips Food Truck Project
Descriptions in general
On your graduation ceremony, you were not satisfied with the food which was Fish and Chips offered by a local restaurant. “The chips were not crispy, and even the fishes were cold!” you said to one of your colleagues who totally agreed with you. Consequently, you and your friend decided to open a Fish & Chips Food Truck from “scratch”. Since you took the course of Financial Accounting at César Ritz Colleges (Brig), your friend thus kindly asked to you to be the CEO, and to manage the company.
Assume that your food truck started operating on 01-01-202X, and by the end of the month (31-01- 202X), you decided to use the knowledge you learnt from the course of Financial Accounting to record and report all the business-related transactions with the ultimate objective of preparing the FOUR financial statements.
Stage 1 – Recording
In this stage, you are required:
- Complete the story by introducing your Fish & Chips Food Truck project. You may want to include the name of the food truck, brief introduction of the owner(s), location of the food truck, business objective (mission and vision statements), financing strategy (issuing shares and borrowings), and so forth.
- Formulate possible business transactions (by describing or stating the business transactions) of the food truck business for the month (January, 202X). No. of business transaction statements are: 18 – 20.
- Use Journal Entry to RECORD each of the business transactions you formulated.
- You can rely on the following list of accounting items to prepare your business transactions and
journal entries.
o Cash and cash equivalents (recording cash received and cash paid);
o Account receivable (recording the amount customers owe your company);
o Inventory (recording purchases of the inventories);
o Supplies (recording purchases of the supplies);
o Pre-paidinsurance(recordingpurchasesofinsurance);
o Cooking equipment (recording purchases of equipment as long-term fixed asset); o Food truck (recording purchases of truck as long-term fixed asset)
o Account payable (recording firm’s obligations to pay in the future – suppliers);
Short-term Note payable (recording firm’s obligations to pay in the future –sellers of the fixed assets);
o Salaries/wages payable (recording firm’s obligations to pay salaries/wages in the future); o Interest payable (recording firm’s obligations to pay interest in the future);
o Income taxes payable (recording firm’s obligations to pay income taxes in the future);
o Long-term note payable (recording firm’s obligations to pay in the future –sellers of the
fixed assets – banks);
o Dividend payable (recording firm’s obligations to pay dividends to shareholders);
o Common shares (recording share issuing);
o Additional paid-in capital (recording extra cash received from share issuing);
o Retained earnings (recording net income/loss, dividend payments);
o Sales revenue (to simplify computations, you can make assumptions on the selling price
per meal, and quantity of the meals sold during the month);
o Cost of goods sold (require assumptions and calculations on cost of goods sold) o Salaries/wages expense (require adjusting journal entry)
o Insuranceexpense(requireadjustingjournalentry)
o Depreciation expense (require adjusting journal entry)
o Interest expense (require adjusting journal entry)
o Income taxes expense (require adjusting journal entry)
o Andetc.
Stage 2 – Summarising
In this stage, you are required:
- Based on the Journal Entries you made, prepare the T-accounts to summarise them.
- Based on the T-accounts you prepared, make the unadjusted Trial balance.
Stage 3 – Making the Adjustments In this stage, you are required: - Prepare Adjusting Journal Entries to the account items you formulated;
- You can rely on the following list to prepare your Adjusting Journal Entries.
o Sales revenue (finalising)
o Cost of goods sold (finalising)
o Salaries/wagesexpense(adjusting) o Insuranceexpense(adjusting)
o Depreciationexpense(adjusting) o Interestexpense(adjusting)
• Combined with the adjusting journal entries, updating relevant T-accounts, and preparing Trial balance.
Prepare the closing procedures. Stage 4 – Preparing the financial reports In this stage, you are required:
• Based on the calculations/results obtained in the previous 3 stages, prepare the financial statements for your company for the month of January, including Balance Sheet, Income Statement, Statement of Shareholders’ Equity, and Statement of Cash flows.
Prepare a cover page containing the name and student number. Prepare an executive summary of the project. The grade for this section will be awarded on the basis of completeness of the information and a well-structured executive summary. (5%)
Provide an overview of the company by including the information related (but not limited to) name of the Fish and Chips Food Truck, location of the business, logo, principal business activities, and so forth. The grade for this section will be given on the completeness and sounding presentation of the section. (10%)
Record the business transactions. Start with formulating possible and related business transactions (by describing or stating the business transactions) of the food truck business for the month (January, 202X). No. of business transaction statements are: 18 – 20. Then, use journal entries to record the business transactions formulated. The grade of this section will emphasise on the comprehensiveness of the business transactions formulated and correctness of the relevant journal entries. (25%)
Summarise the journal entries through T-accounts. Based on the journal entries made, prepare the T-accounts to summarise them. And then, make the unadjusted trial balance for each accounting item. The grade of this section will be awarded based on the correctness of both T-accounts and unadjusted trial balance. (15%)
Make accounting adjustments by the end of the Month (January, 202X). Prepare adjusting journal entries to the account items formulated earlier. And then, update the relevant T-accounts, preparing adjusted trial balance. The grade of this section will be awarded on adjusting journal entries and adjusted trial balance. (15%)
Based on the calculations/results obtained in the previous sections, prepare the financial statements for the month of January, including Balance Sheet, Income Statement, Statement of Shareholders’ Equity, and Statement of Cash flows. The grade will be emphasised on the comprehensiveness of the financial statements. (25%)
Prepare a concluding section, and what is your reflection on this project? – Grading will depend on substance and good presentation of the reflection. (5%)
