Question

"Chuck's Brokerage Service (CBS) is a discount financial services firm offering clients investment advice, trading services, and a variety of mutual funds for investment. Chuck has collected the following information for October"
Advertising and marketing $ 270,000
Brokerage commissions (revenues) 9,000,000
Building rent and utilities 525,000
Fees from clients for investment advice 4,500,000
Labor cost for advice 2,400,000
Managers' salaries 900,000
Sales commissions to brokers 750,000
Training programs for brokers 1,275,000
Fees paid to execute trades 6,000,000
Required:

Prepare an income statement for October for CBS.

Sales revenue

____________________________ __________

_______________________ _______

_______________________ _______

Total Revenues _____

Cost of services sold

_______________________ ________

_______________________ ________

_______________________ ________

Total cost of services ______

_______________________ ______

Marketing and administrative costs

_______________________ ________

_______________________ ________

_______________________ ________

_______________________ ________

_______________________ ________

_______________________ ________

_______________________ ________

Total marketing and administrative costs

_______________________ __________

Answer 1

Answer:

                         Chuck's Brokerage Service (CBS)

                           Income statement for October

                                                           $                  $

Sales revenue

Investment advice Fee              4,500,000  

Brokerage commissions           9,000,000

Total Revenues                                              13,500,000

Less: Cost of services sold

Labor cost for advice                 2,400,000

Sales commissions to brokers  750,000

Fees paid to execute trades     6,000,000

Total cost of services                                      9,150,000

Gross Income                                                 4,350,000

Less: Marketing and administrative costs

Advertising and marketing        270,000

Building rent and utilities           525,000

Training programs for brokers   1,275,000

Managers' salaries                      900,000

Total marketing & admin costs                     2,970,000

Operating Income                                          1,380,000