Question

Prepare an income Statement

Accounts Payable- 88,851

Accounts receivable- 442,120

Accumulated depreciation: building- 1,265

Accumulated depreciation: equipment- 9,900

Advertising Expense- 9,240

Allowance for doubtful accounts- 75,000

Allowance to Reduce Inventory to NRV- 16,000

Bad Debt Expense- 75,000

Bonds Payable- 700,000

Building- 37,500

Cash- 834,544

Common stock- 135,000

Depreciation Expense- 11,165

Dividends- 28,000

Equipment- 21,600

Impairment Loss Expense- 5,000

Income Taxes Expense- 99,000

Income taxes payable- 99,000

Insurance Expense- 22,500

Interest Expense- 31,171

Interest Payable- 35,000

Inventory- 70,000

Land- 88,000

Notes Payable- 0

Office Expense- 28,500

Paid In Capital- Treasury Stock- 6,000

Patent- 45,000

PIC in Excess of Par- Common Stock- 130,000

Premium on Bonds Payable- 52,045

Prepaid insurance- 4,500

Purchases- 177,000

Rent Revenue- 4,500

Retained earnings- 0

Sales Revenue- 790,000

Treasury Stock- 10,000

Unearned rent revenue- 9,000

Utilities Expense- 33,571

Wages Expense- 66,150

Wages Payable-4,000

Answer 1

Income statement
Sales Revenue		790000
less:cost of goods sold [177000Purchase -70000ending inventory ]		(107000)
Gross margin		683000
operating expense
Advertising expense	9240
Bad Debt Expense	75000
Depreciation Expense	11165
Impairment Loss Expense	5000
Insurance Expense	22500
Office Expense	28500
Utilities Expense	33571
Wages Expense	66150
loss on reduction of inventory to NRV	16000
Total operating expense		(267126)
operating income		415874
Other income /(expense)
Rent revenue	4500
Interest expense	(31171)	(26671)
Income before tax		389203
less:Income tax expense		(99000)
Net Income		290203