Question

1. SAW Inc. had the following account balances on 12/31/2020. Prepare the Income Statement for SAW using proper formatting for a merchandising company (multi-step format must be used / See page 266 for example). (8pts)

                                                           

            Cash                             $12,500                        Cost of Goods Sold       $120,500

            A/R                              $10,000                        Pre-Paid Rent               $8,000

            Inventory                      $50,000                        Utility Expense             $5,500

            A/P                              $8,000                          Interest Revenue           $7,500

            Sales                            $465,000                      Salaries Expense           $49,000

            Owner Capital              $20,000                        Owner Withdrawal        $5,800

            Sales Discount Forfeited $17,500                       Rent Expense                $8,500

Answer 1

	Income statement of SAW for the period ended 12/31/2020
	Sales	465000
Less	Cost of goods sold	-120500
	Gross profit		344500
	Sales discoutn foreirted		17500
	Total operating income (A)		362000
	Operating Expenses
	Rent	8500		(assuming Pre paid rent is excluded from here else the amount will be (8500-8000 = 500)
	Utility expense	5500
	Salaries Expense	49000
	Total operating Expenses (B)		63000
	Net operating income (C= A-B)		299000
	Non operating items
	Interest Revenur	7500
	Total non operating income (D)		7500
	Net Income (C-D)		291500