The Income Statement provides a summary of revenues and expenses over a period of time, such as a month, quarter, or year. It provides information about the profitability of a business during the period specified. The following is a cash basis income statement for Sample Café's first month of operation. Calculate the total expenses and net income for the business. Sample Café Income Statement, Cash Basis Month Ended January 31, 20xx Item Value Note Revenue $40,000 Excludes $2,200 in receipts not yet deposited. Equipment $0 Purchased last month for $12,000 (5-year life). Insurance $600 Premium for whole year. Rent and Utilities $4,500 Includes $2,500 in rent and utility deposits. Coffee Purchased $2,300 Includes $100 worth thrown away. Cups Purchased $1,600 $700 still in inventory. Payroll $14,800 Owe $2,400 in taxes. Interest on Loan $200 Paid mid-month. Advertising / Promotion $12,000 $3,000 each week. Total Expenses Net Income Use the notes from the cash basis income statement for Sample Café in question 1 (above) to redo it on an accrual basis. Be sure to break out cost of goods sold from the other expenses, and include a line item for the gross margin.

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To redo the cash basis income statement for Sample Caf on an accrual basis we need to consider when ... View the full answer