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our Assignment The income statement provides a summary of revenues and expenses over a period of time, such as a month, quarter, or year. It provides valuable information about the profitability of a business. This assignment will help you understand the income statement in BizCafe. Please respond to each of the following: The following is a cash basis income statement for Sample Cafe’s first month of operation. Calculate the total expenses and net income for the business. Sample CafeIncome Statement, Cash BasisMonth Ended January 31, 20xx Item Value Note Revenue $40,000 Excludes $2,200 in receipts not yet deposited Equipment $0 Purchased last month for $12,000 (five-year life) Insurance $600 Premium for whole year Rent and utilities $4,500 Includes $2,500 in rent and utility deposits Coffee purchased $2,300 Includes $100 worth thrown away Cups purchased $1,600 $700 still in inventory Payroll $14,800 Owe $2,400 in unpaid taxes Interest on loan $200 Paid mid-month Advertising/promotion $12,000 $3,000 each week Total Expenses Net Income Use the notes from the cash basis income statement for Sample Café in question 1 to redo it on an accrual basis. Copy and paste the table below into your response and fill in the shaded cells. The first row is completed for you. Use the “Note” column to explain any differences between the cash basis and accrual basis income statements. Sample CaféIncome Statement, Accrual BasisMonth Ended January 31, 20xx Item Value Note Revenue $42,200 Includes $2,200 in receipts not yet deposited. Cost of Goods Sold* Gross Profit Equipment depreciation Insurance Rent and utilities Payroll Interest on loan Advertising/promotion Total Expenses Net Income  Hint: Cost of goods sold typically includes the cost of direct labor (labor used to make the product). However, in this case, do not include labor costs because servers (and managers) engage in many tasks beyond making coffee. 3 Compare the results of the two income statements in questions 1 and 2. Were any items missing or overstated using one approach as compared to the other? Which system more accurately reflects the results for the month and why? 4 List three specific ways you might increase the profitability (net income) of your cafe.

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