part 1
Below is Tim’s Coffee Shop Income Statement for the year for 2008. 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.
Income Earned…………………………. $400,527
Expenses:
Salaries Expenses………………………..$101,600
Rent Expense…………………………….$14,400
Depreciation Expense……………………$12,116
Supplies Expense…………………………$135,827
Lease Expense……………………………$11,987
Tax Expense…………………………….. $40,515
Interest Expense………………………… $615
Insurance Expense………………………..$8,956
Total Expenses ——————————–$326,016
Net Income ————————————$74,511
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I need to know if in each area in the pro forma income statement will increase, decrease or stay the same due to large businesses moving into the neighboring buildings into his area and explain the rationale why that line item will increase, decrease or stay the same. Tim serves coffee to many people who work in the area, so he would certainly expect a major increase in his business volume.
This is not looking for dollar figures, primarily your justification on 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/when you do make these assumptions, please describe them and their affects on each line item. These are the line items:
Income Earned
Expenses include:
Salaries
Rent
Depreciation
Supplies
Lease (on your refrigerator)
Tax
Interest (on loans currently held)
Insurance
Given what you have assumed and projected, will the total expenses increase or decrease? Why?
Given what you have assumed and projected, will the net profit increase or decrease? Why?
part 2
In order for Tim’s Coffee Shoppe to be successful, Tim will have to be sure he has a consistent and
reliable supply of coffee beans.
Research coffee bean producing countries on the Internet, and choose one country along with a
grower that would have the greatest supplier potential to import beans for domestic sales with your
distribution firm.
Choose a country and a grower for your supplier of coffee beans that you (as distributor) can
then sell.
? What are the economic advantages of dealing with a vendor from this country?
o Does the country have environmental laws that align with those of our country?
o What are they?
o Will there be a marketing advantage by divulging the source of the coffee beans?
o Why or why not?
o Will sourcing the beans from the supplier you choose affect Tim’s bottom-line or not?
Discuss your reasoning.
Minimum of 2 pages required
Additional Requirements
Min Pages: 2
Level of Detail: Only answer needed
