Final answer:
To prepare an income statement for Jonas Brothers Cough Drops, you will need to calculate Total Revenues, Cost of Goods Sold, Gross Profit, Operating Expenses, Operating Income, Earnings Before Interest and Taxes (EBIT), and Net Income. Net Income is calculated by deducting interest expense from EBIT.
Step-by-step explanation:
To prepare an income statement for Jonas Brothers Cough Drops, you will need to gather relevant financial information such as revenue, expenses, and taxes. Here's how to calculate each item:
1. Start with Total Revenues: This is the total amount of money earned from selling cough drops.
2. Subtract Cost of Goods Sold (COGS): This includes the direct costs associated with producing the cough drops.
3. Calculate Gross Profit: Gross Profit is the difference between Total Revenues and COGS.
4. Deduct Operating Expenses: These are the expenses incurred for running the business, such as rent, salaries, and marketing.
5. Calculate Operating Income: Operating Income is the difference between Gross Profit and Operating Expenses.
6. Deduct Interest and Taxes: Subtract any interest expenses and taxes to find Earnings Before Interest and Taxes (EBIT).
7. Subtract Interest Expense: If there is any interest payable, subtract it from EBIT to calculate Net Income.
So, the final income statement for Jonas Brothers Cough Drops will have the following figures:
a) Net Income: $________ (Calculate by deducting interest expense from EBIT)
b) Gross Profit: $________ (Calculate by subtracting COGS from Total Revenues)
c) Operating Income: $________ (Calculate by subtracting Operating Expenses from Gross Profit)
d) Earnings Before Interest and Taxes (EBIT): $________ (Calculate by subtracting interest expenses and taxes from Operating Income)