Create an operating income statement for Jeans first year. What was Jeans operating income/loss? (10 marks)

His first-year sales performance did not meet his expectations. He sold a total of 30 bikes, and of those one was returned by an unsatisfied customer (who was reimbursed in full.) If sales did not improve considerably, he would have to decide whether to keep the business or close his store by the end of September. The next few months were critical.

Over the course of the first year of operations, Jean had tried a number of marketing tactics. He advertised in the local newspaper, which cost $1000 for a half-page ad. He advertised on the radio, which cost $1000 for the one week he was on the air in May (twenty 30-second spots.) He had a website that displayed his merchandise and his store location, but little else. And he was once interviewed on the local nightly news about bicycle safety. That was all of the promotion in his first year. Jean had believed that if his store was truly the exceptional bicycle retailer he knew it was, word-of-mouth would eventually generate sales, so he would not need to promote much. Unfortunately this was not the case.

Jean expended a lot of money in his first year. He renovated the store, which cost $10,000. He purchased fixturing (like counters and display racks) for which he paid $20,000. He purchased $200,000 worth of inventory. He paid his 5 full-time employees a total of $200,000. His rent is $3,000 per month. His utilities expenses (like heat and electricity) was $6,000 for the year.) He purchased a sign for his store, for which he paid $15,000. He purchased 100 bicycles, at an average price of $1500.

edited:: 2000$ per bike sold