The Income Statement provides a summary of revenues and expenses over a period of time, such as a month, quarter, or year. It provides information about the profitability of a business during the period specified.

1. The following is a cash basis income statement for Sample Cafes first month of operation. Calculate the total expenses and net income for the business. Show calculations for total expenses.

Sample Cafe Income Statement, Cash Basis Month Ended January 31, 20xx

Item	Value	Note
Revenue	$40,000	Excludes $2,200 in receipts not yet purchased
Equipment	$0	Purchased last month for $12,000 (5-year life)
Insurance	$600	Premium for whole year
Rent and Utilities	$4,500	Includes $2,500 in rent and utility deposits
Coffee Purchased	$2,300	Includes $100 worth thrown away
Cups Purchased	$1,600	$700 still in inventory
Payroll	$14,800	Owe $2,400 in taxes
Interest on Loan	$200	Paid mid-month
Advertising/Promotion	$12,000	$3,000 each week
Total Expenses
Net Income