Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

The Business

Betty Buckley has owned and operated a bakery and coffee shop for several years. She has both retail and wholesale operations. The retail coffee shop focuses on selling directly to individual customers, while the wholesale portion of the business involves selling baked goods in large quantities to other businesses such as restaurants, schools, non-profits, and stores. She has a team of skilled staff members who help her run the operation. Inventory turns over rapidly so that daily purchases are expensed directly to cost of goods sold. She performs a physical count of the inventory periodically and adjusts the inventory general ledger account balance accordingly.

Her accounting fiscal period is the calendar year. She has decided to change bookkeepers effective with the start of the new year and has hired you to take over the accounting and bookkeeping. You are to record her business transactions for the month, reconcile the bank account, prepare the month's financial statements on the accrual-basis of accounting, and complete a financial ratio analysis of her financial position and operating results.