Activity 1 - Income Statement Purpose: Understand the information reported on the income statement. Identify revenue and expense accounts reported on the income statement Cool Lope, Inc. - Tropical Smoothies and Shaved Ice Cool Lope, Inc. Consolidated Statements of Earnings For the Years Ended December 31, 20X3, 20X2, 20xi 20X3 20X2 20X1 $21,560 $16,400 $15,180 Net sales $10.297 $9.670 $12.946 Cost of goods sold Gross profit $8,614 $6,103 $5,510 Selling and administrative $4,572 $3,349 $3,276 expenses $1,425 $1,079 $954 Advertising $250 Depreciation and amortization $250 $250 $2,218 $1,377 $1,030 Operating profit Other income (expense) Interest expense ($130) ($130) ($130) $2,348 $1,160 Earnings before income taxes $1,507 Provision for income taxes $517 $255 $332 Net earnings $1.831 S1175 $905 or results of operations during The income statement reports the company's profitability accounting period. S an Revenues are amounts received from customers for products sold and services provided revenues. These represent the "Run the Business" Expenses expenses. Expenses are recorded in the accounting period they benefit. Cost of goods sold expense reports the wholesale costs of inventory sold to customers during the accounting period. are the costs incurred to produce Net income is the difference between revenues and expenses. Net income is also referred to as profit (loss), earnings, or the bottom line Revenues Expenses = Net income Circle whether the account is classified as a revenue (Rev), expense (Exp) Q1 or not reported (Not) on the income statement Advertising expense (Rev / Exp / Not) d. Service revenue (Rev Exp Not) a. Rent expense b Inventory (Rev / Exp/ Not) (Rev / Exp/ Not) e. Building Cost of goods sold (Rev / Exp / Not) f. (Rev Exp Not) C. Review Cool Lope, Inc. income statement above and answer the following questions: Q2 Is the income statement for Cool Lope, Inc. a (Single-Step or Multi-Step) version of the 1. income statement? that cost the company 2. In 20X3 Cool Lope, Inc. sold products to customers for $ $ to produce The first expense for Cool Lope, Inc. that helps to determine the gross profit or how much profit the firm is generating after the cost of products Expenses / Cost of Goods Sold / Research and Development) 3. or services is (Operating 4. The title of the largest expense account is is typically the largest expense account for a company within the (retail / service) industry _reporting $ . which 5. Was Cool Lope, Inc. profitable? (Yes / No) How much profit reported? $ was Net income can also be referred to as (revenues / expenses common stock / earnings) Q3 Now: Examine the annual report for the company you have selected for your "Financial Statement Analysis Report," and answer the following questions for the most recent year provided in the financial statements. 1. What is the total revenue? Gross profit? 2. What was total expenses? 3. What was the largest expense for your company? Why do you think that is? 4. Do they pay interest? If yes, what is the total for interest expense? 5. What is the amount of depreciation? What method did they use to calculate depreciation