SOLUTION: STHM 2313 TU Financial Issues Restaurant Cost of Inventory Questions

STHM 2313
Homework 1 (15 points):
Due date: February 4
E2.3 A new restaurant purchased the following wine during the first month of operations:
March 2: Purchased 12 750ml bottles of M & B wine @ $13.00 each.
March 16: Purchased 24 750ml bottles of M & B wine @ $15.00 each
March 31: Sold 30 bottles during March @ $26 each.
Determine the value of the ending inventory and cost of sales for M & B for March using
the following (4 points):
a. First-in, first-out method
b. Last-in, first-out method
c. Weighted average method
E2.5 A hospitality operation began with retained earnings of $130,000. During the year, cash
dividends of $60,000 were paid to the owners. Net income for the year was $230,000.
Answer the following (2 points):
a. What is the ending balance of retained earnings?
b. What would be the ending balance of retained earnings if a net loss of $22,000 had
been reported rather than the net income?
E2.6 A food department reported sales revenue of $130,000 and direct costs of $65,000 during
March. Determine the following (2 points):
a. What is the department’s contributory income?
b. What is contributory income as a percentage of sales revenue?
E2.11 A food division had beginning inventory of $5,000, purchases of $13,000 and ending
inventory of $3,000. Determine the cost of goods available and cost of sales-food (2
E2.12 A food division reported cost of sales—food of $45,000. Employees meals cost $700,
complimentary meals $100, and transfers in were received from the bar operation with a
cost of $150. Determine the net cost of sales (2 points).
P2.2 The Purple Rose Restaurant has the following food cost information for a given month.
Food inventory, March 1 $2,450
Food inventory, March 31 $1,600
Food purchases, March $ 8,900
Employee meals cost
$ 210
Promotional meals cost $ 290
Calculate cost of sales food, and net cost of sales (3 points) using the following format:
Beginning inventory
Goods available
Less: Ending inventory
Cost of sales (food)
Less: Employee meals
Less: Promotional meals
Cost of sales (net)
$ xx,xxx
( x,xxx)
$ x,xxx
( xxx)
$ x,xxx

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