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Dear,

I reply for the answer.
1. I could find it.
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Sincerely,
Yas

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Dear Yas,

Please try this website: www.mcdonalds.co.jp

This week we begin the study of the income statement.

Sincerely,

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INCOME STATEMENT

Part 1 - Determining Gross Margin

The Income Statement is the statement that shows

Revenue

- Operating Expenses
___________

= Net Income or Loss

In the English language, we show losses with brackets < >, so

Revenue

- Operating Expenses
___________

= Net Income <Loss>

When a company sells goods, it is important to know "gross margin"
before subtracting expenses:

Revenue

- Cost of Goods Sold
________________

= Gross Margin

- Expenses
________________

= Net Income <Loss>

Let's continue with Delaware Parts, Inc.

During January, Delaware Parts had the following transactions:

1. Purchased 100 units at $100 each, total price $10,000.

2. Purchased 100 units at $120 each, total price $12,000.

3. Purchased 100 units at $150 each, total price $15,000.

4. Sold 100 units on credit for a price of $300 each.

5. Paid for the first order of 100 units, $10,000.

When these entries are recorded in a journal, the entries are:

debit credit
_______ _______

1. Inventory $ 10,000
Accounts payable $ 10,000

2. Inventory $ 12,000
Accounts payable $ 12,000

3. Inventory $ 15,000
Accounts payable $ 15,000

4. Cost of Goods Sold $ 10,000
Inventory $ 10,000

Accounts Receivable $ 30,000
Sales $ 30,000

5. Accounts Payable $ 10,000
Cash $ 10,000

In the American income statement, cost of goods sold can be
determined several ways. In transaction number 4, the cost of
inventory sold was determined on a First-In, First-Out basis. This
is called "FIFO." The first units purchased are assumed to be the
first units sold.

Many American companies use "LIFO," meaning Last-In, Last-Out.
This means the cost of the last inventory purchased was assumed to be
cost of goods sold.

If we do a partial Income Statement for Delaware Parts for the month
ended January, 1996, we have:

Delaware Parts, Inc.
Income Statement
January 31, 1996

Revenues $30,000

Cost of Goods Sold:
Beginning Inventory $ - 0 -
Purchases 37,000
_______
Available for sale 37,000
less: Ending inventory 27,000
_______
cost of goods sold 10,000
_______
Gross margin 20,000
_______

Questions:

1. What is the format for an American Income Statement?

2. What would gross margin be if Delaware Parts used LIFO?

Vocabulary - Lesson 4

English Japanese
____________ ______________
cost of goods sold

first-in, first-out

gross margin

inventory

last-in, first-out

purchase

revenue

sale

========================================================================

LESSON 5: INCOME STATEMENT

Part 2 - Determining Net Income

Expenses are outflows of assets to get revenues.

Delaware Parts has the following additional transactions during January:

1. Received a bill from the telephone company for $150.

2. An employee is paid $800 twice a month. $800 was paid on January 16, and
$800 will be paid on February 1.

3. The life of the building is 40 years. (The building purchase for $48,000
is shown in Lesson 3.)

When these entries are recorded in a journal, the entries are:

debit credit
_______ _______

1. Telephone expense $ 150
Utilities payable $ 150

2. Salary expense $ 800
Cash $ 800

Salary expense $ 800
Salary payable $ 800

3. Depreciation expense $ 100
Accumulated depreciation $ 100

Calculation:
$48,000/40 years = $1,200 per year.

$1,200/12 months = $100 per month.

The income statement at the end of January is now:

Delaware Parts, Inc.
Income Statement
January 31, 1996

Revenues $ 30,000

Cost of Goods Sold:
Beginning Inventory $ - 0 -
Purchases 37,000
_______
Available for sale 37,000
less: Ending inventory 27,000
_______
Cost of goods sold 10,000
_______
Gross margin 20,000

Operating expenses:

Depreciation 100
Salary 1,600
Telephone 150
______
total expenses 1,850
_______

Net Income $ 18,150
=======

In American accounting, we draw double lines (========) at the end of a
financial statement.

Vocabulary - Lesson 5
English Japanese
____________ ______________

accumulated depreciation

depreciation expense

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