Go to Tim ’ s Coffee Shoppe and look in the back office . Inside the file drawer labeled “ Business ” is Tim ’ s Coffee Shoppe Income Statement for the year for 2011 . 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 , and you need to help him . In this assignment , discuss whether 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 your rationale why that line item will increase , decrease or stay the same . Remember , Tim serves coffee to many people who work in the area , so he would certainly expect a major increase in his business volume . This assignment is not looking for dollar figures , but 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 and when you do make these assumptions , please describe them and their effects on each line item . You can go on the Internet and search for videos covering financial statements . These are the line items : Income earned : Expenses include : Salaries Rent Depreciation Supplies Lease ( on your refrigerator ) Tax Interest ( on loans currently held ) Insurance Checklist :
· If and when you made assumptions , based on the increased sales volume and how it will affect income and expenses , please describe them and their effects on each line item .
· Given what you have assumed and projected , will the total expenses increase or decrease ? Why ?