Question

Cozy Catering, Inc. has provided the following information pertaining to the store's month ended October 31, 2019:

Sales revenue	$100,000	Supplies expense	$1,500
Interest expense	6,900	Rent expense	4,000
Cost of goods sold	60,000	Wages expense	9,500
Dividends paid	5,000	Utilities expense	1,100
Advertising expense	4,500	Loss on sale of coffee equipment	3,200
Dividends declared	7,100	Income tax expense	3,800
Unearned revenues	6,100

Note: these are not debits and credits, they are in 2 column just to make them fit.

Prepare an income statement through operating income for the month ended October 31, 2019.

Answer 1

Operating Income = Revenue – (Operating Expenses + COGS)

Revenue = $ 100000

Cost of Goods Sold = $ 60000

Operating Expenses

Advertising Expenses = $ 4500

Rent expense = $ 4000

Supplies expense = $ 1500

Wages expense = $ 9500

Utilities expense = $ 1100

Total Operating Expenses = $ 20600

Operating Income = Revenue – (Operating Expenses + COGS)

= $ 100000 - ( $ 20600 + $ 60000 )

= $ 100000 - $ 80600

= $ 19400

Particulars		Amount ($)
Sales Revenue		100000
Cost of Goods Sold		60000
Gross profit		40000
Operating Expenses
Advertising Expenses	4500
Supplies expense	1500
Rent expense	4000
Wages expense	9500
Utilities expense	1100
Total Operating Expenses		(20600)
Operating Income		19400
Other Income ( Expense)
Interest Expense	(6900)
Loss on sale of coffee equipment	(3200)
Total Other Income ( Expense)		(10100)
Income before income taxes		9300
Income tax expense		(3800)
Net Income		5500

The cost of dividends is not included in the company's income statement because they're not an operating expense, which are the costs to run the day-to-day business.