Question

Use the following information to prepare Company’s Income Statement: 5% of sales returned Gross sales =...

Use the following information to prepare Company’s Income Statement:

5% of sales returned

Gross sales = 100,000 + Retail sales from FIFO=25,000

Cost of Goods Sold = 110,000 = from FIFO

Depreciation = 29,675

Sales expenses = 10% of Net Sales

Administrative Expenses = 42,730

Income from other sources = 197,347

Interest = 7.75% of Gross Income

Taxes = 19% of Gross Income

Business   Accounting   
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Answer #1

Solution:

Income Statement
Sales $125,000
less: Sales Return(125,000*5%) 6,250
Net Sales $118,750
Cost of goods sold 110,000
Gross profit 8,750
Operating Expenses
Depreciation 29,675
Selling Expenses 11,875
Administrative Expenses 42,730 84,280
Operating loss (75,530)
Other Income and Expenses 197,347
Income Before Interest and Tax 121,817
Less: Interest Expenses (121,817*7.75%) 9,441
Income Before Tax 112,376
Less: Income Tax (112,376*19%) 2,135
Net Income $110,241
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