Answer – Profit and Loss Statement

Profit and Loss Statement Exercise

Profit and Loss Statement Answer

Fishbourne Marketing

1) Cost of Goods Sold reduces Gross Sales to arrive at Total Income.

2) Net Income would increase by $5,000.

3) Net Income would increase by $5,000.

Profit and Loss Statement

Fishbourne Marketing

January 1, 2014 to December 31, 2014

Income
Gross Sales
$323,789.40
Less Returns and Allowances
$10,000.00
Net Sales
$313,789.40
Cost of Goods
Merchandise
inventory, January 1
$160,000.00
Purchases
$90,000.00
Freight Charges
$2,000.00
Total Merchandise Handled
$252,000.00
Less Inventory, December 31
-$100,000.00
Cost of Goods Sold
$152,000.00
Gross Profit
$161,789.40
Interest Income
$2,500.00
Total Income
$164,289.40
Expenses
Salaries
$50,360.40
Utilities
$5,800.00
Rent
$23,000.00
Office Supplies
$2,250.00
Insurance
$3,900.00
Advertising
$8,650.00
Telephone
$2,700.00
Travel and Entertainment
S$2,550.00
Dues and Subscriptions
$1,100.00
Interest Paid
$2,100.00
Repairs and Maintenance
$1,250.00
Taxes and Licenses
$35,589.00
Total Expenses
$139,289.40
Net Income
$25,000.00

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