Question

Presented below is information extracted from the accounting records of Wolowitz Equipment Supplies Co. for fiscal year ended December 31, 2019:

Accounts Payable	$950	Income Tax Expense	$2,120
Accounts Receivable	$1,270	Interest Expense	$210
Accrued Expenses	$250	Interest Revenue	$40
Accumulated Depreciation	$2,240	Miscellaneous Revenue	$20
Cost of Goods Sold	$13,660	Net Sales	$25,780
Depreciation and Amortization Expense	$810	Other Comprehensive Income, net of tax	$20
Dividends Declared: Common Stock	$	Prepaid Expenses	$90
Dividends Declared: Preferred Stock	$220	Rent Revenue	$30
Gain on Sale of Plant Assets	$8	Selling Expenses	$1,920
General and Administrative Expenses	$2,010	Trademarks	$15
Goodwill	$600	Vehicles	$240

All dollar amounts are in thousands of dollars.

Common Shares Information:

At January 1, 2019, Wolowitz Equipment Supplies Co. had 1,500,000 shares of common stock issued and outstanding. On April 1, 2019, Wolowitz Equipment Supplies Co. issued 300,000 shares of common stock. On November 1, 2019, Wolowitz Equipment Supplies Co. issued 60,000 shares of common stock.

Required:

Prepare a condensed, multi-step income statement for Wolowitz Equipment Supplies Co. for fiscal year ended December 31, 2019 using the form on the following page.

a.       Be sure to properly complete the heading for the income statement.

b.       Enter the proper descriptions and amounts in the spaces provided. Be sure to compute and present the proper profit subtotals.

          Total the non-operating revenues and gains and present the total as one amount on the line “Other Revenue and Gains.”

WARNING: You will not use all of the items presented in this problem to complete the income statement.

Answer 1

MULTI - STEP INCOME STATEMENT FOR WOLOWITZ EQUIPMENT SUPPLIERS CO.

FOR FISCAL YEAR ENDED 31 DECEMBER 2019 $

SALES 25780

COST OF GOODS SOLD 13660

GROSS PROFIT 12120

OPERATING EXPENCES

SELLING EXPENCES 1920

ADMINISTRATIVE EXPENSES 2010

TOTAL OPERATING EXPENCES 3930

8190

OPERATING REVENUE

RENT REVENUE    30

OPERATING INCOME 8220

OTHER REVENUES AND GAINS

INTEREST EXPENSES ( 210)

INTEREST REVENUE 40

GAIN ON SALE OF PLANT ASSET 8

MISCELLANEOUS REVENUE 20

   TOTAL OTHER REVENUES AND GAINS    142

NET INCOME BEFORE TAX 8078

LESS INCOME TAX EXPENSES 2120

NET INCOME 5958