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E3-16 Preparing an Income Statement, Identifying Cash Flow Effects, and Analyzing Results LO3-5 [The following information applies to the questions displayed below.] Lisa Frees and Amelia Ellinger have been operating a catering business for several years. In March, the partners plan to expand by opening a retail sales shop. They have decided to form the business as a corporation called Traveling Gourmet, Inc. The following transactions occurred in March: a. Received $82,000 cash from each of the two shareholders to form the corporation, in addition to $2,200 in accounts receivable, $5,700 in equipment, a van (equipment) appraised at a fair value of $13,400, and $1,300 in supplies. Gave the two owners each 540 shares of common stock with a par value of $1 per share. b. Purchased a vacant store for sale in a good location for $380,000, making a $76,000 cash down payment and signing a 10-year mortgage from a local bank for the rest. c. Borrowed $52,000 from the local bank on a 10 percent, one-year note. d. Purchased and used food and paper supplies costing $11,230 in March; paid cash. e. Catered four parties in March for $4,400; $1,640 was billed, and the rest was received in cash. f. Made and sold food at the retail store for $12,000 cash. g. Received a $440 telephone bill for March to be paid in April. h. Paid $383 in gas for the van in March. i. Paid $6,680 in wages to employees who worked in March. j. Paid a $320 dividend from the corporation to each owner. k. Purchased $52,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $21,000 (added to the cost of the building); paid cash. E3-16 Part 1 Required: 1. Prepare an income statement in good form for the month of March. TRAVELING GOURMET, INC. Income Statement (unadjusted) Revenues: Total revenues Expenses: Total costs and expenses 2. Identify operating (O), investing (1), and financing (F) activities affecting cash flows. Include the direction and amount of the effect. (Select "NE" if there is no effect.) Transaction Statement of Cash Flows Direction and Amount of Effect a. b. C. d. e. f. g. h. i. j. k

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