Use accounting and financial principles to support the operations of an organization. ESS: Communication Numeracy
Question:
Use accounting and financial principles to support the operations of an organization.
ESS:
• Communication
• Numeracy
• Critical thinking & problem solving
• Information management
• Interpersonal Skills
This Week’s Detailed Case Study Information
Jackie has shared the most recent Statement of Income with you (see below). With her
accounting background, she found it easy to put it together. Kate, on the other hand,
struggles to make sense of it. While she understands what it takes to run the business, she is still
unsure about how the business is doing.
Kate has asked you to review the Statement of Income and prepare a presentation on the
state of the business. This presentation should include a year-over-year comparison of year 1
and year 2 and details on the bottom line (i.e. if the business is at a profit/loss and how much
money the business is making). Finally, both sisters would like you to provide a forecast for
year 3. What expenses can you expect to go up or down and by how much?
Deliverables for This Week’s Case Study
Create and record a presentation of the Statement of Income, including a year-over-year
comparison of year 1 and year 2, and a forecast of year 3.
statement of income
YEAR 2 | YEAR 1 | |
REVENUES | $ 347,692 | $ 309,716 |
COST OF SALES | ||
Purchases | 229,335 | 206,893 |
Discounts | 22,135 | 19,659 |
Freight in and duty | 3,797 | 3,239 |
Merchant Fees | 5,774 | 4,571 |
Operating supplies | 4,804 | 4,206 |
265,845 | 238,568 | |
Closing Inventory | (49,853) | (47,019) |
215,992 | 191,549 | |
GROSS PROFIT | 131,700 | 118,167 |
EXPENSES | ||
Salaries and wages | 51,432 | 50,528 |
Rental | 25,466 | 23,634 |
General & Administrative | 6,521 | 7,567 |
Office | 1,705 | 1,771 |
Professional fees | 2,800 | 2,691 |
Bank charges | 662 | 602 |
Advertising and promotion | 460 | 229 |
Utilities | 1,316 | 2,413 |
Meals and entertainment | 750 | 839 |
Repairs and maintenance | 65 | - |
Insurance | 1,301 | 1,191 |
92,478 | 91,465 | |
INCOME/(LOSS) FROM OPERATIONS | 39,222 | 26,702 |
Amortization | 5,622 | 5,459 |
Interest | 1,626 | 1,519 |
NET INCOME/(LOSS) | $ 31,974 | $ 19,724 |
Auditing a business risk appraoch
ISBN: 978-0324375589
6th Edition
Authors: larry e. rittenberg, bradley j. schwieger, karla m. johnston