Madrigal Coffee Company (MCC) purchases and roasts raw coffee beans from around the world and sells roasted whole and gr
Posted: Thu May 19, 2022 3:47 pm
Madrigal Coffee Company (MCC) purchases and roasts raw coffee beans from around the world and sells roasted whole and ground coffee to retailers and restaurants. The company began business on November 1, 2019.
Beginning Account Balances as of January 1, 2020 are as follows:
Cash$32,000
Inventory$52,000
Accounts Payable$10,500
Common Stock$71,500
Retained Earnings $2,000
The following transactions took place during the year ended December 31, 2020:
(1) January 2Madrigal sold 125,000 shares of its common stock to shareholders for $225,000 cash to help in launching MCC. MCC has no par value for its stock.
(2) January 2Madrigal signed a lease starting on March 1 to rent a warehouse for roasting and storing its coffee beans. The lease calls for monthly rent of $8,250, payable on the first of each month starting March 1.
(3)January 31Madrigal hired a VP of operations. Her salary is $4,500 per month. She will start work on February 1 and is paid on the first day of each month for the work performed in the previous month. Her first paycheck will be on March 1 for work performed in February.
(4) January 31MCC obtained a $250,000 cash loan from NationalBank. The note has a 4.75% annual interest rate and requires monthly interest only payments (0.40% per month) on the first day of every month beginning on March 1, 2020. The loan is due to be paid in full in two years.
(5) February 28MCC purchased roasting equipment, shelving, racks, and a forklift for the warehouse on account for $202,500. This equipment is expected to be usable for 10 years
(6) March 1Made its first monthly interest payment to NationalBank for the $250,000 loan it obtained in transaction (4). Also made first wage payment to the VP of operations from transaction (3). – Don’t forget the rest of the months!
(7) March 28MCC purchased a general insurance plan that will cover the company for one year from April 1, 2020through March 30, 2021. The policy cost $32,500 for the year. MCC paid for the policy in cash.
(8) June 1MCC pays for the equipment purchased in transaction (5) and the $10,500 of accounts payable that it owed from the prior year.
(9) June 15Sold 35,000 pounds of roasted coffee to McDugalson account for use in their restaurants for $3.10 per pound. The coffee cost MCC $1.35 per pound to purchase and roast.
Beginning Account Balances as of January 1, 2020 are as follows:
Cash$32,000
Inventory$52,000
Accounts Payable$10,500
Common Stock$71,500
Retained Earnings $2,000
The following transactions took place during the year ended December 31, 2020:
(1) January 2Madrigal sold 125,000 shares of its common stock to shareholders for $225,000 cash to help in launching MCC. MCC has no par value for its stock.
(2) January 2Madrigal signed a lease starting on March 1 to rent a warehouse for roasting and storing its coffee beans. The lease calls for monthly rent of $8,250, payable on the first of each month starting March 1.
(3)January 31Madrigal hired a VP of operations. Her salary is $4,500 per month. She will start work on February 1 and is paid on the first day of each month for the work performed in the previous month. Her first paycheck will be on March 1 for work performed in February.
(4) January 31MCC obtained a $250,000 cash loan from NationalBank. The note has a 4.75% annual interest rate and requires monthly interest only payments (0.40% per month) on the first day of every month beginning on March 1, 2020. The loan is due to be paid in full in two years.
(5) February 28MCC purchased roasting equipment, shelving, racks, and a forklift for the warehouse on account for $202,500. This equipment is expected to be usable for 10 years
(6) March 1Made its first monthly interest payment to NationalBank for the $250,000 loan it obtained in transaction (4). Also made first wage payment to the VP of operations from transaction (3). – Don’t forget the rest of the months!
(7) March 28MCC purchased a general insurance plan that will cover the company for one year from April 1, 2020through March 30, 2021. The policy cost $32,500 for the year. MCC paid for the policy in cash.
(8) June 1MCC pays for the equipment purchased in transaction (5) and the $10,500 of accounts payable that it owed from the prior year.
(9) June 15Sold 35,000 pounds of roasted coffee to McDugalson account for use in their restaurants for $3.10 per pound. The coffee cost MCC $1.35 per pound to purchase and roast.