plz add explanation for 38 39 40. Mario\'s Pizzas Part 1 (Information for Questi
ID: 2800410 • Letter: P
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plz add explanation for 38 39 40.
Mario's Pizzas Part 1 (Information for Questions 38-40) On March 1st 2010 Mario, a pizza maker, invested his life savings (he had recently sold a valuable painting) into a new business vnture he intended to run. His first act was to invest $250,000 into the corporation called “Mario's Pizzas Inc. . In return, he took 400,000 common shares of the corporation. As the owner-manager of the business he then, purchased a small building which contained an industrial kitchen, and all of the major appliances (a walk-in fridge, a pizza oven, a warming oven, etc.) necessary to run a take-away pizza shop. The building cost him $200,000 Over the next 2 months, Mario proceeded to purchase $30,000 worth of kitchen equipment and supplies (various pots and pans, and drawers full of knives, cutting boards and utensils). On April 29th, two nights before his grand opening, he purchased $4,000 worth of groceries and produce several 20 kg. bags of flour, two dozen 10 kgs. bags of sugar, yeast, crates full of tinned tomato paste, 100 kgs. of mozzarella cheese, and a van load of fresh and frozen tomatoes, mushrooms, green peppers, etc. Late that night, he sat down to open all his mail It contained letters and cards from friends and old business acquaintances from all over the world wishing him good luck in his new business. Also in the mail was a bill, from the graphic designer who had helped Mario design the sign outside the store, the in store signage and the menus. The bill was for $3,000. This was the amount that Mario had negotiated with the designer, and it seemed to be fair since the graphic designer had spent many hours on the project and produced some cye-catching designs. The bil from the graphic designer indicated that it was to be paid immediately. “I'll send him a check, this week" Mario thought to himself. The only other thing in the mail was an invoice from Mario's insurance company. Mario had insured the Mario sighed "I suppose I should pay this soon, too." Fortunately, the money that Mario had not spent was in the business' bank account. building and its contents, and he now owed S3,000 to the Safe-T First Insurance Company. "hmmm.. N.B. This is NOT a trick question. There is NO other information, and there were NO other relevant transExplanation / Answer
38. Computation of total assets:
Total assets = Building + Kitchen equipment + cash + current assets (stock)
= 200,000 + 30,000 + 16,000+4,000
= $250,000
39. Computation of current assets:
Here we have only one current asset= cash + current assets (stock)
= 16,000 + 4,000 = $20,000
40. Current liabilities:
we have 2 unpaid bills, thus accounts payable = bill for designer + bill of insurance company
= 3,000 + 3,000 = $6,000
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