Homework: Impacts to the Profit and Loss Statement
Go to Tim's Coffee Shoppe and look in the back office. Inside the file drawer labeled "Business" is Tim's Coffee Shoppe's income statement for the most recent year. This is the most recent record Tim has. This year, several large businesses are moving in around his coffee shop and he expects business to increase. Tim needs to create a pro forma profit and loss (income) statement for this year, and you need to help him.
In this homework, discuss whether each area in the pro forma income statement will increase, decrease, or stay the same due to large businesses moving into the neighboring buildings and explain your rationale for why that line item will increase, decrease, or stay the same. Remember, Tim serves coffee to many people who work in the area, so he would certainly expect a major increase in his business volume.
This homework is not looking for dollar figures, but primarily your justification for why the line items will change and what direction they will change, if any. You may make assumptions based on the increased sales volume and how it will affect income and expenses; if and when you do make these assumptions, please describe them and their effects on each line item.
Review the tutorials provided in the learning activity and search the Internet for videos about financial statements for assistance.
Format your homework according to the following formatting requirements:
o The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
o The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
o Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.