Question

Kabili Bites Ltd. operates a chain of restaurants across Canada. Most of the company’s business is from customers who enjoy in-restaurant lunches and dinners and pay before they leave. The company also provides catered food for functions outside of the restaurant. Catering customers are required to pay a 40% deposit at the time of booking the event. The remaining 60% is due on the day of the function.

During 2020, the restaurant chain collected $7,036,000 from restaurant and catered sales. At year end, December 31, 2020, the catered sales amount included $121,000 for a convention scheduled for January 12, 2021. Kabili Bites Ltd. paid $3,298,000 for food supplies during the year and $1,248,000 for wages for the chefs and other restaurant staff. The restaurant owed $62,000 in wages to its staff at year end, which will be paid on January 4, 2021, as part of the normal weekly pay schedule

1) Did Kabili Bites have a cost of goods sold? Why or why not?

2)What other expenses do you think the company probably has?

Answer 1