QUESTION 1

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The following is a summary of transactions for January 20xx, gathered by the Sample Cafe bookkeeper.

Sample Cafe Transactions

Item	Notes
7,600 medium cups of coffee sold at $3.00 each	Includes 400 medium cups medium cups sold to the college and delivered to a reception that has been invoiced, but not yet paid.
4,300 large cups of coffee sold at $4.00 each
Espresso maker purchased last year for $11,400	5-year life
$600 premium for business insurance	Premium for full year
$3,200 for rent	Includes $2,100 in rent deposits.
$2,200 for coffee beans	Includes coffee discarded valued at $100
$1,600 for coffee cups	0 cups in inventory at the beginning of January. $600 worth of cups still in inventory at the end of month.
$15,500 to employees for payroll	$2,200 owed in payroll taxes
$100 of interest on loan	Paid mid-month
$900 for electricity and water	Includes $500 in utility deposits
$12,000 in advertising	$3,000 per week billed monthly

Use the preceding transaction information to cash Based and Accrual-Based Income Statement for January using the following template.

Account	Balance
Revenues	$
Expenses
Coffee and Cups	$
Salaries and Wages	$
Rent and Utilities	$
Advertising	$
Insurance	$
Equipment	$
Interest	$
Other Expenses	$
Total Expenses	$
Net Income	$

1.Using the Accrual Basis Income Statement, what is the gross margin percent for Sample Cafe?

2. For each cup of coffee sold, what is the average contribution margin using the Accrual Basis Income Statement? in dollars

3. Using the Accrual Basis Income Statement, what are salaries and wages as a percent of revenue?

4. Using the Accrual Basis Income Statement, what is the net income as a percent of revenue

5. If Sample Cafe had given employees a 10% raise at the beginning of January, what would net income have been presuming taxes increase at the same rate as wages? Use the Accrual Basis Income Statement. in dollars