Johnny’s Lemonade Stand An Introduction to Accounting.

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Johnny’s Lemonade Stand An Introduction to Accounting

Day 1 – Opening Day On Day 1, Johnny sells $30 worth of lemonade that costs him $10 to make. How much money did Johnny make today?

Day 2 On Day 2, Johnny sells $30 worth of lemonade that costs him $10 to make. Tim, one of Johnny’s customers, bought $1 worth of lemonade today, but didn’t have a dollar on him and promised to pay Johnny the $1 tomorrow. How much money did Johnny make today?

Day 3 On Day 3, Johnny sells $30 worth of lemonade that costs him $10 to make, but never receives the $1 today that Tim promised him yesterday. How much money did Johnny make today?

Day 4 On Day 4, Johnny sells $30 worth of lemonade that costs him $10 to make. That morning he also purchases $7 worth of lemonade supplies (lemons, sugar, etc.) with cash in order to prepare for the rest of the week’s sales. How much money did Johnny make today?

Day 5 On Day 5, Johnny sold $30 worth of lemonade that cost him $10 to make. At the end of the day, Johnny decides to purchase another $7 worth of lemonade supplies (i.e. lemons, sugar), but, owing to the shopkeeper’s generosity, does not have to pay for those supplies until two weeks from now when he’ll have made more money. How much money did Johnny make today?

Day 6 On Day 6, Johnny sold $30 worth of lemonade that cost him $10 to make. Having run a successful stand for the past few days, Johnny decides to upgrade his stand and invests in a new table costing $40 (and gives the old one back to his parents). He pays for the table using the cash he’s earned over the past few days. How much money did Johnny make today?

Day 7 Day of Rest

Day 8 On Day 8, Johnny sells $30 worth of lemonade that costs him $10 to make. Having spent a lot of money on the new table, Johnny’s funds are running low, so he asks his father for a loan. His father agrees to loan him $30 interest-free to be re-paid within two weeks time. How much money did Johnny make today?

Day 9 On Day 9, Johnny sells $30 worth of lemonade that costs him $10 to make. Much to his chagrin, he notices that some of the lemons he had purchased a few days ago have gone bad. The rotten lemons had cost him about $5. How much money did Johnny make today?

Day 10 On Day 10, Johnny sells $30 worth of lemonade that costs him $10 to make. Wanting to help his son, Johnny’s mother decides to invest $50 in her son’s business. How much money did Johnny make today?

Day 11 On Day 11, Johnny sells $30 worth of lemonade that costs him $10 to make (as usual). Right before he closes for the day, a customer named Joe drops by, samples the lemonade and likes it so much that he buys $40 worth of lemonade for his family and friends to enjoy over the next few weeks. Johnny receives $40 in cash from Joe, but doesn’t serve an ounce of lemonade to Joe or any of his friends or family today. How much money did Johnny make today?

Day 12 On Day 11, Johnny sells $30 worth of lemonade that costs him $10 to make (as usual). Enjoying the huge cash windfall from yesterday’s “advance sales”, Johnny decides to pay his father’s loan back early. Johnny repays his father the $30 in principal he borrowed plus an additional $5 in interest, even though he isn’t required to do so (he wants to show Dad just how “grown-up” he is). How much money did Johnny make today?

What does any of this have to do with Accounting?