(Solved by Humans)-( Attach file is the sample essay, same topic & sub topics but I

Question

( Attach file is the sample essay, same topic & sub topics but I need a new P&L statement)

In an Excel document, create a profit-and-loss statement (P&L). See the table from Chapter 12 in the textbook,?Donna?s Gift Shop,as an example. Do not copy that P&L statement.Create a P&L statement for a new start-up company that you would like to launch.? Then, in a Word document, write about the following:

• 1) Define and discuss the significance to the retailer of the line items found in the P&L of Net Sales, Cost of Goods, Gross Profit, Operating Expenses, Net Profit, and any other rows in the P&L you wish to include.
• 2) How does the information in the P&L apply to, and benefit, the retailer?
• 3) How does the P&L relate to the balance sheet? How are they different, and how do they inform one another?
• 4)?Include?any?sample?calculations?that?you?believe?are?important?to?inform?your?response.

Your P&L statement must be in an Excel document and written responses in a Word document, which should meet the following requirements:

• Be 3-4?double-spaced pages
• Cite at least 3 resources other than the course textbook

Running head: PROFIT AND LOSS

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Profit and Loss

PROFIT AND LOSS

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Profit and Loss

How well a company does over time is very important to keep track of. In order to help
tell their revenue, companies tend to keep a profit-and-loss statement. This is ?a summary of a
retailer?s revenues and expenses over a giver period of time? [ CITATION Ber13 \l 1033 ]. Using
this statement will allow companies to compare two different, but similar time periods to each
other to see what the difference is. For example, a company could compare their December 2013
statement with their December 2014 statement to see how much profit the company has gained
compared to the previous year. By doing these, companies will be able to watch trends, plan, and
take action in order to help increase the company?s profits and cut back their losses.
Significance of P&L
The profit-and-loss statement, or P&L statement, is made up of many different lines with
different dollar amounts. Each line helps keep information organized and easily understandable
for the company. The P&L is split into different sections that correlate with one another and have
lines with different information. The first line in the first section is the Net Sales line. This line
show the revenue that the retailer received during the specific time period. This number shows
the sales after customer returns, markdown, and employee discounts. This allows the company to
see what they made after discounts, but before any costs or taxes are pulled out. The next line is
the Cost of goods. This line shows how much the company paid in order to acquire the
merchandise that was sold. This number is based on the purchase price and freight charges the
company has to pay. The third and final line in the first section deals with the gross profit. This
will show what the difference is between the net sales and the cost of goods sold [ CITATION
Ber13 \l 1033 ].

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The next section deals with operating expenses. These are the cost of actually running the
retail business [ CITATION Ber13 \l 1033 ]. Depending on the kind of company that is being run,
there may be different things that appear in this section. Some examples of what would fall under
operating expenses would be salaries, supplies, maintenance, and advertising. Some of these will
always appear no matter what kind of company is being run. This being said, the amount that is
spent on each section will vary from company to company. At the end of this section, these cost
are totaled up to show the company their total costs.
The final section of the P&L statement Starts with the Net Profit before taxes. This
number comes from the total costs being subtracted from the gross profit. After looking at the net
profit before taxes, the following line will show the cost of taxes. The third and final line in this
section is the net profit after taxes. This number shows what was earned after all costs and taxes
were taken out. In order to get this number the taxes is subtracted from the original net profit.
This helps break down everything from what the company made, how much it cost to run the
company, and the final profit after everything has been taken out.
Benefit to Retailer
P&L statements are very beneficial to retailers. These statements ?reports a company?s
revenues, expenses, and most of the gains and losses which occurred during the period of time
specified in its heading? [ CITATION Har \l 1033 ]. In other words, this sheet informs companies
of whether they have profited or if they have lost money. If a company takes this report, they are
able to compare it to a different year?s report that falls during the same time period. This allows
the company to see how things have changed between the two different time periods. For
example, if a company is comparing two different December reports, they can see that the
previous year the company spent more money on operating expenses and for that reason had a

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smaller net profit compared to the current year. Seeing this will show that it was a good idea to
cut back on unnecessary costs in order to increase profit.
Relation to Balance Sheet
When looking at a P&L statement, some may wonder how it is effected or correlates with
a balance sheet. To start with, a balance sheet shows a business?s financial condition for a
specific period of time [ CITATION The00 \l 1033 ]. Basically, this sheet itemizes the retailer?s
assets, liabilities, and net worth [ CITATION Ber13 \l 1033 ]. When looking from a P&L to a
balance sheet, the income statement shows the company?s financial performance where the
balance sheet show the financial health [ CITATION Geo \l 1033 ]. By looking at the balance
sheet, a retailer is able to see how their financial health has been and see how the P&L statement
will affect their company. If the company is financially healthy, it may not be too big of a
concern if the company lost money. However, if the company is not financially healthy, then the
P&L statement will show where losses have occurred and what can be cut back.
My P&L
Ashley's Accessory
Company
Net Sales
Cost of Goods
Gross profit

Dec14
36,400
9,100
27,300

Operating Expenses
Salaries
Advertising
Supplies
Other
Total Cost

7,280
500
300
3,000
11,080

Net profit before taxes
Taxes
Net profit after taxes

16,220
2,730
13,490

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Conclusion
With every company, it is important to have documentation of the profits and losses that the
company has incurred. By having these statements, the company is able to compare them other
to similar point in time and grow from them. Each statement shows how much money was spent
on costs, how much was earned before taxes, and what the final outcome was. Without these
statements, companies would have a difficult time adjusting their spending and comparing their
income. These statements are very important in tracking the company?s business.

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References

Averkamp, H. (n.d.). What is the profit and loss statement? Retrieved from Accounting Coach:
http://www.accountingcoach.com/blog/what-is-the-profit-and-loss-statement
Berman, B., & Evans, J. R. (2013). Retail Management A Strategic Approach. Upper Saddle
River: Pearson Education Inc., Prentice Hall.
Boykin, G. (n.d.). How Does the Income Statement Relate to the Balance Sheet? Retrieved from
Chron: http://smallbusiness.chron.com/income-statement-relate-balance-sheet55418.html
The Basics of Balance Sheets. (2000). Retrieved from Inc.:
http://www.inc.com/articles/2000/05/18941.html