BUS500 Trident Financial Intelligence VWV Income Statement
Business Finance
We reviewed the balance sheet for VWV in the prior module. This time we are examining the income statement for the same entity.
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VWV Company |
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Income Statement |
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For the Period Ending December 31, 20XX |
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Revenues |
$540,000 |
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Cost of goods sold |
200,000 |
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Gross profit |
$340,000 |
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Operating expenses |
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Salaries |
$100,000 |
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Lease for office |
30,000 |
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Advertising and promotion |
24,000 |
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Utilities |
9,700 |
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Property taxes |
18,000 |
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Payroll taxes |
11,500 |
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Insurance |
8,000 |
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Depreciation |
19,922 |
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Miscellaneous expenses |
9,000 |
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Total operating expenses |
$230,122 |
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Operating income |
$109,878 |
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Interest income |
$250 |
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Interest expense |
12,000 |
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Net interest expense |
$11,750 |
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Net income |
$98,128 |
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Use the above income statement to answer the questions below.
- Is VWV a manufacturer/reseller or a service company?
- Explain the term cost of goods sold in your own words. Why is this item significant?
- Does the company have employees?
- Does the company own some type of property? Can we tell from looking at the income statement alone or do we need to look at the balance sheet too?
- Are earnings per share important information for VWV Company?
- How do the dividends affect the income statement?
- How do we know that VWV Company is using the accrual basis of accounting? Hint: Do not forget to look at the balance sheet from the prior module.
- Why is the company using the accrual basis of accounting rather the cash basis?
- Comment on operating income versus net income.
SLP Assignment Expectations
Use Word and respond in a question and answer format. There is no need to use Excel for this particular SLP.
