Booga! Booga! Tavern Income Statement For the Period Ended Jan 31, 0012 The income statement shows total sales revenue of $34,600 with a cost of sales of $10,800 resulting in a gross profit of $23,800. Operating expenses included wages of $8,000, resulting in operating income of $15,800.

1. Uniform System of Accounts
& Income Statement
Chapter 2

2. Uniform System of Accounts
Definition
A method of presenting financial
statement information so that
comparison is made easier between
establishments or with hospitality
industry averages

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. 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. Income Statement

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. 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
revenues
Revenue
Food Revenue $25,000
Beverage Revenue 14,000
Total Revenue $39,000

8. Types of Revenue
Revenue:
 Room Revenue
 Food and Beverage
 Laundry
 Health Club, Golf, Spa
 Parking
 Gift Shop or Rental
 Telephone/Communications
 Miscellaneous and Other Income

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. Simple Income Statement
Revenues
Cost of Sales
Gross Profit
Expenses
Income (Loss) Before Taxes

11. Starlight Piano Lounge
Income Statement
For the Month Ended September 30, 2004
Revenue
Food Revenue $30,000
Beverage Revenue 18,000
Total Revenue $48,000
Cost of Sales
Food Cost $9,850
Beverage Cost 5,500
Total Cost of Sales 15,350
Gross Profit $32,650
Expenses
Wages Expense $14,000
Cleaning Supplies Expense 1,100
Marketing Expense 1,000
Rent Expense 3,000
Depreciation Expense 500
Total Operating Expenses 19,600
Income (Operating) Before Taxes $13,050

12. Expenses
Direct Operating Expenses
Undistributed Operating Expenses
Fixed Charges

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. 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. Indirect Expenses
Indirect expenses are not directly
related to revenue producing activities
Two categories:
 Undistributed Operating Expenses
 Fixed Charges

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. 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. 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 = $102,000
E2.8
a. Net assets, owner’s equity
b. Contributory income
c. Fixed asset
d. Liabilities
e. Contributory income

19. Income
Problem 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. REVIEW
1. Undistributed expenses
2. Direct operating expenses
3. Variable expenses
4. Fixed expenses/charges
5. Departmental contributory income
6. Cost of sales
7. Net cost of sales
8. Adjustments to cost of sales
9. Gross margin
10. Operating income
11. Net income
12. Indirect expense
13. Uniform system of accounts
14. Chart of accounts
15. What is the difference between a departmental contributory
income and a operating income?

21. 1. P2.2
Opening Inventory $2,782
Purchases 9,807
Closing Inventory (2,612)
Cost of Sales Food $ 9,977
Less: Employee Meals $219
Less: promotional Meals 288
Net Cost of Sales $9,470
2. P2.3
Opening Inventory $15,357
Purchases 47,879
Closing Inventory (12,887)
Add: Transfers in 68
Less: Employee meals (1,828)
Less: promotional Meals ( 219)
Complimentary Meals (140)
Transfers out ( 128)
Net Cost of Sales $48,102

22. So Yesterday Restaurant
Prepare an income statement in proper format for So Yesterday
Restaurant using the following information for the month of August
2012.
Sales revenue
Food $300,000
Beverage $180,000
Cost of sales
Food $105,000
Beverage $72,000
Wages $192,000
Menus $15,000
Rent $10,000
Insurance $2,000
Depreciation Furn., Equip $19,000

23. So Yesterday Restaurant
Income Statement Period ending_____
Sales revenue
Food $
Beverage
Total Revenue $
Cost of Sales
Food $
Beverage (_________)
Gross margin $
Expenses
Wages $
Menus
Rent
Insurance
Depreciation furn _________ (________)
Operating income $________

24. Forest Canopy Adventure Tours
Using the following financial information for the above
stated company prepare an income statement in proper
format for the month of April, 2012. (31 days)
Sales revenue $18,000
Wages $ 6,800
Brochures $ 6,000
Insurance $ 583
Depreciation – van $ 792

25. Forest Canopy Adventure Tours
Income Statement
for month ending April 31, 2012
Revenues $18,000
Expenses
Wages $6,800
Brochures 6,000
Insurance 583
Depreciation-van 792 (14,175)
Operating Income $ 3,825

26. DEPARTMENTAL INCOME STATEMENT
DEPARTMENTAL SALES REVENUE
-
DEPARTMENTAL EXPENSES
=
DEPARTMENTAL CONTRIBUTORY
INCOME

27. HOTEL PRIMO – FOOD & BEVERAGE DEPARTMENT
INCOME STATEMENT FOR THE WEEK ENDING 31/12/2008
Sales Revenue
food $25,000
beverage 15,000 $40,000
Cost of Sales
food $ 8,000
beverage 6,000 14,000
Gross margin $26,000
Expenses
wages $ 6,500
salaries 5,000
laundry 900
linen 500
china 700 13,600
Departmental Contributory Income $12,400

28. Calculating Cost of Sales
Opening/Starting Inventory
+
Purchases
-
Closing/Ending Inventory
=
Cost of sales
Opening inventory $ 5,000
Add Purchases 25,000
Less Closing Inventory 3,000
Cost of Sales $27,000

29. ADJUSTMENT TO COST OF SALES
COST OF SALES
Opening 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. ADJUSTMENTS TO COST OF SALES
Opening Inventory Sept 1 $ 2,000
Purchases 32,000
Closing Inventory Sept 30 4,000
Cost 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. HOTEL PRIMO – ROOMS DEPARTMENT
INCOME STATEMENT FOR THE WEEK ENDING 31/12/2008
Sales Revenue
rooms $56,000
space rental 2,000 $58,000
Expenses
wages $10,000
salaries 4,000
laundry 2,500
linen 1,900
cleaning 1,100 19,500
Departmental / Contributory Income $38,500

32. Food Department
Income Statement for 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 cost (224,200)
Gross Margin $336,300
Operating Expenses
Salaries, wages $176,400
Employee meals 18,200
Supplies expense 10,300
Glassware, tableware 4,300
Laundry, linen 13,500
License expense 2,400
Printing expense 4,900
Misc expense 8,200 (238,200)
Operating income $98,100
Other income 800
Departmenta lcontributory income $98,900

33. SUMMARY INCOME STATEMENT
DEPARTMENTAL CONTRIBUTORY INCOMES
-
UNDISTRIBUTED / INDIRECT EXPENSES
=
INCOME BEFORE FIXED CHARGES
-
FIXED CHARGE
=
OPERATING INCOME

34. HOTEL PRIMO – SUMMARY INCOME STATEMENT
FOR THE WEEK ENDING 31/12/2008
Departmental Contributory Incomes
food & beverage $12,400
rooms & space rent 38,500 $50,900
Undistributed expenses
admin & general $12,000
marketing 4,000
property op. & maint 5,000
utilities 5,500 ( 26,500)
Income before fixed charges $24,400
Fixed charges
property taxes $ 1,500
depreciation 15,000 (16,500)
Operating Income $ 7,900
Income Tax (25%) (1,975)
Net Income $ 5,925

35. RESPONSIBILITY ACCOUNTING
REVENUE CENTER
Generates Sales Revenues with little or no expenses
PROFIT CENTER
Generates Sales Revenue, has Expenses
COST CENTER
Generates no direct revenue

36. Distribution of Indirect Costs Page 72
Indirect costs can be distributed to the operating departments
based on the follo0wing basis
A. Sales revenue basis
Marketing, admin, insurance
B. 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. 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. 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. STARLIGHT PIANO LOUNGE
INCOME STATEMENT – WORKING PAPERS
ACCOUNT TITLE
REVENUE - FOOD $30,000
REVENUE - BEVERAGE $18,000
FOOD COST $9,850
BEVERAGER COST 5,500
WAGE EXPENSE 14,000
CLEANING SUPPLIE EXPENSE 1,100
MARKETING EXPENSE 1,000
RENT EXPENSE 3,000
DEPRECIATION EXPENSE 500

40. Starlight Piano Lounge
Income Statement
For the Month Ended September 30, 2004
Revenue
Food Revenue $30,000
Beverage Revenue 18,000
Total Revenue $48,000
Cost of Sales
Food Cost $9,850
Beverage Cost 5,500
Total Cost of Sales 15,350
Gross Profit $32,650
Operating Expenses
Wages Expense $14,000
Cleaning Supplies Expense 1,100
Marketing Expense 1,000
Rent Expense 3,000
Depreciation Expense 500
Total operating expenses $19,600
Income Before Taxes $13,050

41. Prepare an income statement using the below information
Booga! Booga! Tavern Financial Information for Period Ended Jan31, 0012
1. Sales revenue $34,600
2. Opening inventory 3,400
3. Purchases 11,200
4. Closing inventory 3,800
5. Wages 8,400
6. Supplies 2,400
7. Laundry 1,400
8. Rent 1,000
9. Insurance 200
10.Depreciation 500
11.Misc 600

42. INCOME STATEMENT – REPORT FORMAT
Booga! Booga! Tavern
Income Statement
For period ended January31,2009
Sales revenue $34,600
Cost of sales
Beginning inventory $3,400
Purchases 11,200
Ending inventory 3,800 (10,800)
Gross margin $23,800
Expenses
Wage s $8,400
Supplies 2,400
Laundry 1,400
Glassware 800
Rent 1,000
Insurance 200
Depreciation 500
Misc 600 (15,300)
Operating income $8,500

43. Prepare an Income Statement in Report Format from Following
Information
D&D retaurant for period ended Jan 31,0012
1. Revenues $49,000
2. Cost of sales 17,600
3. Wages 15,800
4. Laundry 1,200
5. Supplies 3,400
6. Other 2,400
7. Rent 2,000
8. Insurance 400
9. Depreciation 2,000
10. Interest 8000
Split costs between Operating costs and fixed charges

44. Income Statement - Report Format
D&D Restaurant
Income Statement
For period ending January 31, 2009
Revenues $49,000
Cost of sales 17,600
Gross margin $31,400
Operating expenses
Wages $15,800
Laundry 1,200
Supplies 3,400
Other 2,400 ( 22,800)
Income before fixed charges $8,600
Fixed charges
Rent $2,000
Insurance 400
Depreciation 2,000
Interest 800 ( 5,200)
Operating income $ 3,400

45. Page 95, P 2.5 Cindy’s Restaurant
Departments Dining Banquets Beverages
Sales revenue $204,000 $110,000 $92,000
Cost of sales 81,600 41,800 29,440
Gross profit $122,400 $ 68,200 $62,560
Operating costs
Wages &Salar $65,280 $35,200 $12,880
Other direct 18,360 8,800 1,840
Tot Direct 83,640 44,000 14,720
Departmental
Contributory income $38,760 $24,200 $47,840

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