Explanation Given Information: In the year 2016: Amaya’s Soul Food Catering has sales of $597341, sales allowances and returns is $10514, inventory cost is $38917, purchases cost $261053 and year-end inventory of $42013. The operating expenses are: salary $90500, insurance $12200, utilities $7582, maintenance $1077, rent $18400, depreciation $2700. In the year 2015: Amaya’s Soul Food Catering has sales of $435,913, sales allowances and returns is $8019, cost of inventory is $36,992, purchases cost is $248,504 and year-end inventory of $41,007. The operating expenses are: salary $82,450, insurance, utilities, maintenance, rent and depreciation is $12,200, $6097, $817, $17,800 and $2300 respectively. Formula used: Prepare an income statement using the following steps, 1. Record total sales. 2. Record sales returns and allowances. 3. Subtract gross sales with sales returns and allowances. Net sales = Total sales − Sales returns and allowances Steps to calculate and record cost of goods sold. a. Record cost of beginning inventory. b. Record cost of purchases. c. Record cost of ending inventory. d. Add cost of beginning inventory and cost of purchase and subtract cost of ending inventory. Cost of goods sold = Cost of beginning inventory + Cost of purchases − Cost of ending inventory Find and record gross profit. Gross profit = Net sales − Cost of goods sold Find and record net income Net income = Gross profit − Operating expenses Percent of net sales. Percent of net sales = amount of item net sales × 100 % Calculation: Consider the provided information. Consider the company Amaya’s Soul Food Catering in the year 2016. Gross sales are $597,341. Sales allowances and returns is $10,514. Beginning inventory cost is $38,917. Purchases cost is $261,053. Year-end inventory is $42,013. Therefore, the net sales of the company are, Net sales = $ 59 , 7341 − $ 10 , 514 = $ 586 , 827 And the cost of the goods sold is, Cost of goods sold = Cost of beginning inventory + Cost of purchases − Cost of ending inventory = $ 38 , 971 + $ 261 , 053 − $ 42 , 013 = $ 258 , 011 Hence, the gross profit is, Gross profit = Net sales − Cost of goods sold = $ 586 , 827 − $ 258 , 011 = $ 328 , 816 Consider the operating costs for the company is, Salary, Insurance, Utilities, Maintenance, Rent and Depreciation are $90,500, $12,200, $7,582, $1,077, $18,400, $2,700 respectively. Therefore, total the operating costs is, Total the operating costs = $ 90 , 500 + $ 12 , 200 + $ 7 , 582 + $ 1 , 077 + $ 18 , 400 + $ 2 , 700 = $ 132 , 459 And hence the net income is, Net income = $ 328 , 816 − $ 132 , 459 = $ 196 , 357 Percentage of net sales, Percent of net sales = amount of item net sales × 100 % Therefore, percentage sales = 597 , 341 586 , 827 × 100 ≈ 101.8 Percentage sale return, Percent of sale return = amount of item net sales × 100 % Therefore, sale return = 10 , 514 586 , 827 × 100 ≈ 1.8 Percentage beginning inventory, Percentage = amount of item net sales × 100 % beginning inventory = 38,917 586 , 827 × 100 ≈ 6.6 Percentage purchase, Percentage = amount of item net sales × 100 % Therefore, purchase = 261,053 586 , 827 × 100 ≈ 44.5 Percentage ending inventory, Percentage = amount of item net sales × 100 % Therefore, ending inventory = 42,013 586 , 827 × 100 ≈ 7.15 Percentage cost of goods sold, Percentage = amount of item net sales × 100 % Therefore, cost of goods sold = 257,957 586 , 827 × 100 ≈ 43.95 Percentage gross profit from sales, Percentage = amount of item net sales × 100 % Therefore, gross profit from sales = 328,870 586 , 827 × 100 ≈ 56.0 Percentage salary, Percentage = amount of item net sales × 100 % Therefore, salary = 90,500 586 , 827 × 100 ≈ 15.4 Percentage insurance, Percentage = amount of item net sales × 100 % Therefore, insurance = 12,200 586 , 827 × 100 ≈ 2.1 Percentage utilities, Percentage = amount of item net sales × 100 % Therefore, utilities = 7,582 586 , 827 × 100 ≈ 1.3 Percentage maintenance, Percentage = amount of item net sales × 100 % Therefore, maintenance = 1,077 586 , 827 × 100 ≈ 0.18 Percentage rent, Percentage = amount of item net sales × 100 % Therefore, rent = 18,400 586 , 827 × 100 ≈ 3.1 Percentage depreciation, Percentage = amount of item net sales × 100 % Therefore, depreciation = 2,700 586 , 827 × 100 ≈ 0.46 Percentage total Operation expenses, Percentage = amount of item net sales × 100 % Therefore, Total Operation expenses = 132,459 586 , 827 × 100 ≈ 22.6 Percentage total net income, Percentage = amount of item net sales × 100 % Therefore, net income = 196,411 586 , 827 × 100 ≈ 33.5 Consider the company Amaya’s Soul Food Catering in the year 2015. Gross sales are $435,913. Sales returns and allowances is $8,019

11th Edition

ISBN: 9780134496436

Author: Cheryl Cleaves, Margie Hobbs, Jeffrey Noble

Publisher: PEARSON

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Chapter 21.2, Problem 2-4SC

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To calculate: A comparative income statement for the year 2015 and 2016 for Amaya’s Soul Food Catering.

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Chapter 21.2, Problem 2-3SC

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A comparative income statement for the year 2015 and 2016 for Amaya’s Soul Food Catering.

Solution Summary: The author calculates the comparative income statement for the year 2015 and 2016 for Amaya's Soul Food Catering.

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To calculate: A comparative income statement for the year 2015 and 2016 for Amaya’s Soul Food Catering.

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