Assume an accounting period of 1 week. You start an ice cream business and this is what you do in your first week (all of the below occurs during week 1):

You invest $5 in your ice cream selling business You get a $25 loan from the bank. You go to the grocery store to buy half-and-half, heavy cream, eggs, vanilla sugar, and vanilla extract. You buy enough to make 40 scoops. Your total cost is $20. You pay $10 in cash and $10 is charged to your account at the grocer. Your brother makes a batch of ice cream for 20 scoops and charges $1 for production labor (cash). You sell the 20 scoops at $1 each. You receive cash for 10 scoops and the other 10 scoops are purchased on account. You repay $10 of the bank loan. The banker charges you $1 in interest (cash). The neighbors where you have your ice cream stand ask you to buy an insurance policy. The insurance agent offers you a three-week policy which costs $3 payable in advance. You have to pay for the entire policy in cash now. You purchase an ice cream stand for $8. You also buy a tiny patch of land from a friends family for $2. You pay for the stand and the land with cash. You depreciate the ice cream stand $1/week including during your first week of business. A customer pays $4 for four scoops she bought on account.

Use the accrual method.

INCOME STATEMENT

SALES: _______

BEGINNING INVENTORY: _________

PURCHASES: __________

LABOR: ____________

TOTAL AVAILABLE FOR SALE (Beginning inventory + purchases + labor): _________

ENDING INVENTORY: _________

COGS: _________

GROSS PROFIT: _________

EXPENSE 1 (Explain the type of expense and provide the dollar amount. For example: Advertising expense: $1): ____________________________________

EXPENSE 2 (Explain the type of expense and provide the dollar amount. For example: Advertising expense: $1): __________________________________

EXPENSE 3 (Explain the type of expense and provide the dollar amount. For example: Advertising expense: $1): ____________________________________

EXPENSE 4 (Explain the type of expense and provide the dollar amount. For example: Advertising expense: $1): ____________________________________

TOTAL EXPENSES: _________

NET PROFIT BEFORE TAXES: _________