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charlie is concerned that he has less cash now than he had when he started explain w 592797

This is the first part of an ongoing case that will appear at the end of most subsequent chapters. It is recommended that you keep case solutions, notes, and other case information in a separate file or binder for quick reference. Charlie Driver has $30,000 saved and has decided to attend college, taking courses in marketing and retailing. To help pay his tuition and living expenses, he contracted with a mobile catering company as an independent driver. Charlie will run his mobile catering business on a cash basis; he has named his business Charlie’s Convenient Catering, or the 3C Company for short. He opened a company bank account with $30,000. He bought a used, fully equipped mobile catering truck for $26,000, and operated from January 4 to December 31, 2003.

At the end of the year, Charlie had $26,010 in the bank and $148 in a cash drawer. Invoices show he purchased food, beverages, and supplies inventories for $45,296; ending inventory remaining on the truck was $350. His invoices for truck operating expenses total $3,828 paid, and he has one unpaid truck repair invoice for $254. Charlie withdrew $2,000 a month for personal expenses.

The truck has a five-year life and no residual value, and straight-line depreciation is to be used. Charlie asks you to help him put together his business information and reconstruct his cash sales. He recorded his daily cash sales in a notebook that cannot be found. Calculate 3C Company’s revenue and prepare an accrual income statement. Charlie is concerned that he has less cash now than he had when he started. Explain why

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