Question

Current Attempt in Progress William Murray achieved one of his life-long dreams by opening his own business, The Blue Driving Range, on May 1,2025 . He invested $24,100 of his own savings in the business. He paid $6,850 cash to have a small building constructed to house the operations and spent $860 on golf clubs, golf balls, and yardage signs. Murray leased 4 acres of land at a cost of $1,320 per month. (He paid the first month's rent in cash.) During the first month, advertising costs totaled $760, of which $200 was unpaid at the end of the month. Murray paid his three nephews $400 for retrieving golf balls. He deposited in the company's bank account all revenues from customers ($5,260). On May 15 , Murray withdrew $810 in cash for personal use. On May 31, the company received a utility bill for $190 but did not immediately pay it. On May 31, the balance in the company bank account was $18,560. Murray is feeling pretty good about results for the first month, but his estimate of profitability ranges from a loss of $5,540 to a profit of $1,780.

Answer 1

Based on the information provided, let's calculate the net profit or loss for The Blue Driving Range in its first month of operations:

Investment and Expenses:

- Initial investment: $24,100

- Building construction cost: $6,850

- Equipment cost: $860

- Lease cost for land (1 month): $1,320

- Advertising costs: $760 (of which $200 was unpaid)

- Payment to nephews: $400

- Utility bill (unpaid): $190

- Personal withdrawal: $810

Total Expenses:

$6,850 + $860 + $1,320 + $760 + $400 + $190 + $810 = $10,190

Revenues:

- Revenues from customers: $5,260

Net Profit/Loss:

$5,260 - $10,190 = -$4,930

Based on the calculations, the business incurred a loss of $4,930 in the first month of operation.

It's worth noting that Murray's estimate of profitability ranges from a loss of $5,540 to a profit of $1,780. However, based on the given information, the actual result is a loss of $4,930. To accurately assess profitability and understand the financial performance, it's important for Murray to gather all the relevant financial information, including any additional revenues or expenses not mentioned in the scenario. Regular financial analysis and monitoring will help him make informed decisions and adjustments to improve profitability in the future.

Lrean more about profit of $1,780.