2012 hrt132chapter2 (2)

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2012 hrt132chapter2 (2)

  1. 1. Uniform System of Accounts& Income StatementChapter 2
  2. 2. Uniform System of AccountsDefinition A method of presenting financial statement information so that comparison is made easier between establishments or with hospitality industry averages
  3. 3. Uniform System of Accounts System for classifying, organizing and presenting financial information Most simply… a standard list of account names and numbers to be reported in standard format financial statements The Hotel Association of New York initiated the original Uniform System of Accounts for Hotels (USAH) in 1925
  4. 4. Advantages Information can be collected on a large scale and compared National and regional averages can be created for different industry segments Individual properties can use industry averages for management purposes
  5. 5. Income Statement
  6. 6. Income Statement Purpose: to show economic results (income or loss) of business operations over a specified period of time Major elements:  Revenues  Expenses  Income or loss
  7. 7. Revenues Revenue is recognized when earned and not necessarily when received (accrual accounting) May have a variety of revenue sources Individually list and then total operating revenuesRevenue Food Revenue $25,000 Beverage Revenue 14,000 Total Revenue $39,000
  8. 8. Types of RevenueRevenue:  Room Revenue  Food and Beverage  Laundry  Health Club, Golf, Spa  Parking  Gift Shop or Rental  Telephone/Communications  Miscellaneous and Other Income
  9. 9. Types of Expenses Expenses are incurred in order to operate a business. They are recorded when incurred, not necessarily when payment is made. Types  Cost of Sales  Direct Operating Expenses  Undistributed Operating Expenses  Fixed Charges
  10. 10. Simple Income Statement Revenues Cost of Sales Gross Profit Expenses Income (Loss) Before Taxes
  11. 11. Starlight Piano Lounge Income Statement For the Month Ended September 30, 2004Revenue Food Revenue $30,000 Beverage Revenue 18,000 Total Revenue $48,000Cost of Sales Food Cost $9,850 Beverage Cost 5,500 Total Cost of Sales 15,350Gross Profit $32,650Expenses Wages Expense $14,000 Cleaning Supplies Expense 1,100 Marketing Expense 1,000 Rent Expense 3,000 Depreciation Expense 500 Total Operating Expenses 19,600Income (Operating) Before Taxes $13,050
  12. 12. Expenses Direct Operating Expenses Undistributed Operating Expenses Fixed Charges
  13. 13. Direct Expenses Can be directly traced to  a department and/or  specific revenue-generating activities Consist mostly of variable costs such as cost of sales, wages, supplies Also include fixed costs such as salaries *Controllable by departmental manager, who is held accountable for these results
  14. 14. Variable and Fixed Expenses Variable Expenses change with the volume of sales Fixed Expenses remain same no matter what happens to the volume of sales
  15. 15. Indirect Expenses Indirect expenses are not directly related to revenue producing activities Two categories:  Undistributed Operating Expenses  Fixed Charges
  16. 16. Undistributed Expenses Usually not traceable to one specific department Incurred by supporting departments, not revenue-generating departments Administrative & General Marketing Property Operations & Maintenance Utilities
  17. 17. Fixed Charges Usually in this separate section because they are controlled by owners, not managers (unless they are the same) Usually only 4 accounts  Rent or Property Taxes  Insurance  Interest  Depreciation
  18. 18. Practice Create income statements Page 93P2.1 E2.2, E2.4, E2.8 on pp 91-92 E2.2 TRACEABLE E2.4Opening inventory + Purchases – Closing inventory = CoS $38,000 + $88,000 + $24,000 = $102,000E2.8 a. Net assets, owner’s equity b. Contributory income c. Fixed asset d. Liabilities e. Contributory income
  19. 19. IncomeProblem P2.1 Page 93 Statement Midlands Restaurant – Food dept’ For a quarter ended March 31, 0011 Sales Revenue Grill Room $183,200 Coffee Garden 82,900 Banquets 294,400 Total Revenue $560,500 Net food Cost 224,200 Gross Profit $336,300 Expenses Wages & Salaries $176,400 Employee meals 18,200 Supplies 10,300 Glass & Tware 4,300 Laundry & Linen 13,500 Licenses 2,400 Printing 4,900 Miscellaneous 8,200 Total Expenses 238,200 Departmental Contributory Income $ 98,100
  20. 20. REVIEW1. Undistributed expenses2. Direct operating expenses3. Variable expenses4. Fixed expenses/charges5. Departmental contributory income6. Cost of sales7. Net cost of sales8. Adjustments to cost of sales9. Gross margin10. Operating income11. Net income12. Indirect expense13. Uniform system of accounts14. Chart of accounts15. What is the difference between a departmental contributory income and a operating income?
  21. 21. 1. P2.2Opening Inventory $2,782Purchases 9,807Closing Inventory (2,612)Cost of Sales Food $ 9,977Less: Employee Meals $219Less: promotional Meals 288Net Cost of Sales $9,4702. P2.3Opening Inventory $15,357Purchases 47,879Closing Inventory (12,887)Add: Transfers in 68Less: Employee meals (1,828)Less: promotional Meals ( 219)Complimentary Meals (140)Transfers out ( 128)Net Cost of Sales $48,102
  22. 22. So Yesterday RestaurantPrepare an income statement in proper format for So YesterdayRestaurant using the following information for the month of August2012.Sales revenueFood $300,000Beverage $180,000Cost of salesFood $105,000Beverage $72,000Wages $192,000Menus $15,000Rent $10,000Insurance $2,000Depreciation Furn., Equip $19,000
  23. 23. So Yesterday Restaurant Income Statement Period ending_____ Sales revenueFood $ Beverage Total Revenue $ Cost of SalesFood $Beverage (_________)Gross margin $ ExpensesWages $MenusRentInsuranceDepreciation furn _________ (________)Operating income $________
  24. 24. Forest Canopy Adventure ToursUsing the following financial information for the abovestated company prepare an income statement in properformat for the month of April, 2012. (31 days)Sales revenue $18,000Wages $ 6,800Brochures $ 6,000Insurance $ 583Depreciation – van $ 792
  25. 25. Forest Canopy Adventure Tours Income Statement for month ending April 31, 2012 Revenues $18,000 ExpensesWages $6,800Brochures 6,000Insurance 583Depreciation-van 792 (14,175) Operating Income $ 3,825
  26. 26. DEPARTMENTAL INCOME STATEMENT DEPARTMENTAL SALES REVENUE - DEPARTMENTAL EXPENSES = DEPARTMENTAL CONTRIBUTORY INCOME
  27. 27. HOTEL PRIMO – FOOD & BEVERAGE DEPARTMENT INCOME STATEMENT FOR THE WEEK ENDING 31/12/2008Sales Revenue food $25,000 beverage 15,000 $40,000Cost of Sales food $ 8,000 beverage 6,000 14,000Gross margin $26,000Expenses wages $ 6,500 salaries 5,000 laundry 900 linen 500 china 700 13,600Departmental Contributory Income $12,400
  28. 28. Calculating Cost of Sales Opening/Starting Inventory + Purchases - Closing/Ending Inventory = Cost of sales Opening inventory $ 5,000Add Purchases 25,000Less Closing Inventory 3,000 Cost of Sales $27,000
  29. 29. ADJUSTMENT TO COST OF SALES COST OF SALESOpening Inventory + Purchases – Closing Inventory = Cost of Sales NET COST OF SALES Cost of Sales – Adjustments to Cost of Sales = Net Cost of Sales ADJUSTMENTS TO COST OF SALES  Interdepartmental Transfers Wine from the bar to the kitchen Fruit from the kitchen to the bar  Employee Meals  Promotional Expenses
  30. 30. ADJUSTMENTS TO COST OF SALESOpening Inventory Sept 1 $ 2,000Purchases 32,000Closing Inventory Sept 30 4,000Cost of Food $30,000 Transfers, kitchen to bar $ 250 employee meals cost 1,300 promotional meals cost 500 ( $ 2,050) Transfers, bar to kitchen 150 Net cost of Sales $28,100
  31. 31. HOTEL PRIMO – ROOMS DEPARTMENT INCOME STATEMENT FOR THE WEEK ENDING 31/12/2008Sales Revenue rooms $56,000 space rental 2,000 $58,000Expenses wages $10,000 salaries 4,000 laundry 2,500 linen 1,900 cleaning 1,100 19,500Departmental / Contributory Income $38,500
  32. 32. Food Department Income Statement for first quarter ended March 31, 0007 Sales RevenueGrill Room $183,200Coffee Garden 82,900Banquets 294,400 $560,500 Cost of SalesNet food cost (224,200)Gross Margin $336,300 Operating ExpensesSalaries, wages $176,400Employee meals 18,200Supplies expense 10,300Glassware, tableware 4,300Laundry, linen 13,500License expense 2,400Printing expense 4,900Misc expense 8,200 (238,200)Operating income $98,100Other income 800Departmenta lcontributory income $98,900
  33. 33. SUMMARY INCOME STATEMENTDEPARTMENTAL CONTRIBUTORY INCOMES - UNDISTRIBUTED / INDIRECT EXPENSES = INCOME BEFORE FIXED CHARGES - FIXED CHARGE = OPERATING INCOME
  34. 34. HOTEL PRIMO – SUMMARY INCOME STATEMENT FOR THE WEEK ENDING 31/12/2008Departmental Contributory Incomes food & beverage $12,400 rooms & space rent 38,500 $50,900Undistributed expenses admin & general $12,000 marketing 4,000 property op. & maint 5,000 utilities 5,500 ( 26,500)Income before fixed charges $24,400Fixed charges property taxes $ 1,500 depreciation 15,000 (16,500)Operating Income $ 7,900Income Tax (25%) (1,975)Net Income $ 5,925
  35. 35. RESPONSIBILITY ACCOUNTING REVENUE CENTERGenerates Sales Revenues with little or no expenses PROFIT CENTER Generates Sales Revenue, has Expenses COST CENTER Generates no direct revenue
  36. 36. Distribution of Indirect Costs Page 72Indirect costs can be distributed to the operating departmentsbased on the follo0wing basisA. Sales revenue basis Marketing, admin, insuranceB. Space basis Maintenance, utilities A 1 add all departmental sales revenues 2 divide departmental revenues by the total to obtain percentage 3 split costs by appropriate % B 1 calculate total usable space (square feet or meters 2 divide spaces of individual departments to obtain percentages 3 split costs by appropriate
  37. 37. Page 94 P2.2 & P2.3 P2.2 Beginning inventory $2,782 Purchases 9,807 Ending inventory ( 2,612) Cost of sales (food) $9,977 Less: employee meals $ 219 Less: promotional meals 288 ( 507) Net of cost sales $9,470 P2.3 Beginning inventory $15,357 Purchases 47,879 Ending inventory ( 12,887) Cost of sales $50,349 Add: transfers in 68 Less: transfers out $ 128 Less: employee meals 1,828 Less: promotional meals 219 Complimentary meals 140 (2,315) Net cost of sales $48,102
  38. 38. P2.1 FOOD DEPARTMENT INCOME STATEMENT FOR THE FIRST QUARTER ENDED MARCH 31,0007 Sales Revenue Grill room $183,200 Coffee garden 82,900 Banquets 294,400 $560,500 Cost of sales Net food costs (224,200) Gross margin $336,300 Operating expenses Salaries, wages $176,400 Employee meals expense 18,200 Supplies expense 10,300 Glassware 4,300 Linen/laundry 13,500 Licenses expense 2,400 Printing 4,900 Miscellaneous 8,200 (238,200) Operating income $ 98,100 Other income 800 Departmental income $98,900
  39. 39. STARLIGHT PIANO LOUNGE INCOME STATEMENT – WORKING PAPERSACCOUNT TITLEREVENUE - FOOD $30,000REVENUE - BEVERAGE $18,000FOOD COST $9,850BEVERAGER COST 5,500WAGE EXPENSE 14,000CLEANING SUPPLIE EXPENSE 1,100MARKETING EXPENSE 1,000RENT EXPENSE 3,000DEPRECIATION EXPENSE 500
  40. 40. Starlight Piano Lounge Income Statement For the Month Ended September 30, 2004Revenue Food Revenue $30,000 Beverage Revenue 18,000 Total Revenue $48,000Cost of Sales Food Cost $9,850 Beverage Cost 5,500 Total Cost of Sales 15,350Gross Profit $32,650Operating Expenses Wages Expense $14,000 Cleaning Supplies Expense 1,100 Marketing Expense 1,000 Rent Expense 3,000 Depreciation Expense 500Total operating expenses $19,600Income Before Taxes $13,050
  41. 41. Prepare an income statement using the below informationBooga! Booga! Tavern Financial Information for Period Ended Jan31, 00121. Sales revenue $34,6002. Opening inventory 3,4003. Purchases 11,2004. Closing inventory 3,8005. Wages 8,4006. Supplies 2,4007. Laundry 1,4008. Rent 1,0009. Insurance 20010.Depreciation 50011.Misc 600
  42. 42. INCOME STATEMENT – REPORT FORMAT Booga! Booga! Tavern Income Statement For period ended January31,2009Sales revenue $34,600Cost of salesBeginning inventory $3,400Purchases 11,200Ending inventory 3,800 (10,800)Gross margin $23,800 ExpensesWage s $8,400Supplies 2,400Laundry 1,400Glassware 800Rent 1,000Insurance 200Depreciation 500Misc 600 (15,300)Operating income $8,500
  43. 43. Prepare an Income Statement in Report Format from Following InformationD&D retaurant for period ended Jan 31,00121. Revenues $49,0002. Cost of sales 17,6003. Wages 15,8004. Laundry 1,2005. Supplies 3,4006. Other 2,4007. Rent 2,0008. Insurance 4009. Depreciation 2,00010. Interest 8000Split costs between Operating costs and fixed charges
  44. 44. Income Statement - Report Format D&D Restaurant Income Statement For period ending January 31, 2009Revenues $49,000Cost of sales 17,600Gross margin $31,400Operating expensesWages $15,800Laundry 1,200Supplies 3,400Other 2,400 ( 22,800)Income before fixed charges $8,600Fixed chargesRent $2,000Insurance 400Depreciation 2,000Interest 800 ( 5,200)Operating income $ 3,400
  45. 45. Page 95, P 2.5 Cindy’s RestaurantDepartments Dining Banquets BeveragesSales revenue $204,000 $110,000 $92,000Cost of sales 81,600 41,800 29,440Gross profit $122,400 $ 68,200 $62,560Operating costsWages &Salar $65,280 $35,200 $12,880Other direct 18,360 8,800 1,840Tot Direct 83,640 44,000 14,720DepartmentalContributory income $38,760 $24,200 $47,840
  46. 46. Page 95 P2.5 Cindy’s Resataurant Consolidated Income Statement Cindy’s Restaurant Consolidated Income Statement For period ended 00,0012 Contributory incomes Dining $38,760 Banquets 24,200 Beverages 47,840 Total Contributory Incomes $110,800 Undistributed costs Admin $12,000 Marketing 10,000 Utilities 5,000 Maintenance 12,120 Depreciation 14,000 Insurance 4,000 Total 57,120 Operating Income $53,680

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