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Your friend Pablo owns company called "Essential Eats" (EE for short). EE makes baked goods using a free community kitchen. Pablo sells them at a local weekly sport park meet up. The sports park provides plates, napkins etc. This is a pretty good deal for Pablo as he only pays for the ingredients he uses to do the baking and a little bit of advertising.He said if he had to pay for the kitchen it would cost another $150 and the supplies like plates and napkins would add another $100.He sold $1,400 worth of baked goods this week. The ingredients cost him $500 and his advertising was $100.
Problem 1: How much should Pablo show as cost of goods sold expense on his financial statements?
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