information is supplied to you as of December 31, 20X2: The JW Motel (JWM) has two operated departments: rooms and food. The following Problem 15 Account Rooms department-salaries and wages $ 350,000 Account Balance Food department-salaries and wages Management fees $ 200,000 $ ? Supplies and other-food department $ 40,000/ Food purchases $ 220,000 Room sales $1,400,000 Interest expense ? Cost of food sold ? Food sales $ 500,000 A&G-salaries $ 100,000/ Franchise fees $ 60,000/ $ 60,000 Maintenance-contract $ 80,000 Depreciation $ 50,000 Heat, light, & power $ 20,000 Water Food-allowances $ 3,000 1. The JWM borrowed $1,000,000 from the Red Cedar Bank on April 1, 20X2. The annual 2. The beginning and ending inventories of food were $5,000 and $7,000, respectively. Food consumed by the food and A&G department employees during the year (free of $ $ $ 20,000, 30,000 50,000 50,000 50,000 40,000) $ $ 134 Chapter 3 Information & telecom systems-contract Marketing expenses --advertising Insurance (fire) Supplies and other--room department Property taxes A&G-other expenses Other information is as follows: interest rate is 10 percent. charge) totaled $2,000 and $1,000, respectively. V3. Fringe benefits and payroll taxes for all employees, including free food, are 30 percent of gross salaries and wages. V 4. The JWM pays an average of 25 percent of its pretax income to various governmental units in the form of income taxes. 5. The management fee to be paid to the management company is 2 percent of total net revenue and 5 percent of total income after undistributed operating expenses. 16. An investment in Marriott stock that cost $10,000 is sold for $15,000. 7. A van that cost $25,000 was sold for $2,000. Its net book value at the time of the sale was $5,000 18. A one-year certificate of deposit was purchased at the Spartan National Bank; $100,000 was invested on September 1, 20X2. The annual interest rate is 6 percent. Required: Prepare an income statement for 20X2 for the JWM based on the format of Exhibit 4. The Income Statement 105 Exhibit 4 Summary Income Statement Net Revenue Labor Costs Cost of and Related Other Sales Expenses Experses Profit Loss) Operated Departments Rooms Food and Beverage Golf Course and Pro Shop Health Club/Spa Parking Other Operated Departments Miscellaneous Income Total Operated Departments Undistributed Operating Expenses Administrative and General Information and Telecommunications Systems Sales and Marketing Property Operation and Maintenance Uslities Total Undistributed Expenses Totals Gross Operating Profit Management Fees Income Before Non-Operating Income and Expenses Income Rent Property and Other Taxes Insurance Other Total Non-Operating Income and Expenses Earnings Before Interest, Taxes, Depreciation, and Amortization Interest Depreciation Amortization Total Interest, Depreciation, and Amortization Income Before Income Taxes Income Taxes Net Income Less: Equals: Less: Equals: Ending inventory Cost of goods consumed Goods used internally Cost of goods sold
