In addition to preparing the balance sheet described in Lone Pine Cafe (A), Mr. Simpson, the accountant, agreed to prepare an income statement. He said that such a financial statement would show Mrs. Antoine how profitable operations had been, and thus help her to judge whether it was worthwhile to continue operating the restaurant.
In addition to the information given in the (A) case, Mr. Simpson learned that cash received from customers through March 30 amounted to $43,480 and that cash payments were as follows:
Monthly payments to partners* | $23,150 |
Wages to part-time employees | 5,480 |
Interest | 540 |
Food and beverage suppliers | 10,016 |
Telephone and electricity | 3,270 |
Miscellaneous | 255 |
Rent payments | 7,500 |
*One-third to each partner
Assignment
- Prepare an income statement for the period of the cafe’s operations through March 30, 1998.
- What does this income statement tell Mrs. Antoine?
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