Question

A list of accounts and balances below are ending December 31, 2019, from Wesley's Machining & Welding, Inc. (WMW). Using these account balances, complete a cost of goods sold (COGS) worksheet. Then construct the income statement for the period ending December 31, 2019. Use the balance from the COGS worksheet for COGS on the income statement. Separate operating expenses from the non-operating expenses to sum operating income as EBITD (earnings before interest, taxes, depreciation). Then subtract non-operating expenses and add in non-operating income to determine net income.

Account

Balance

Beginning inventory (January 1, 2019)

$22,000

Depreciation expenses

$12,000

Ending inventory (December 31, 2019)

$16,000

Income tax expenses

$5,700

Insurance expense

$2,500

Interest expenses

$3,000

Interest revenue

$500

Marketing expenses

$7,000

Office supplies expenses

$1,800

Purchase discounts (for inventory)

$2,000

Purchases (inventory)

$100,000

Sales commission expenses (20%)

$50,000

Total revenue for the year ending December 31, 2019

$260,000

Transportation in (inventory)

$4,500

Utilities expense

$13,000

Wages expenses

$52,000

Answer 1

Answer:
	COST OF GOODS SOLD Work sheet
	Particulars	Amount
	Inventory at the Beginning	22000
	Add: Purchases (100000-2000)	98000
	(Net puchases=Purchase-discount)
	Less: Inventory at the End	16000
	Cost of Goods sold	104000
	Income Statement
	Particulars	Amount
	Total revenue for the year	260000
	Less: Cost of Goods sold	104000
	Gross Profit	156000
	less: Operating Exp
	utility exp	13000
	wages exp	52000
	transportation	4500
	sales commission	50000
	marketing exp	7000
		126500
	EBITD	29500
	less;
	interest	3000
	Depreciation	12000
	income tax exp	5700
		20700
	Income	8800
	add: Non operating income	500
	Less;
	Insurance exp	2500
	office supplies exp	1800
		4300
	Net Income	5000