Question

The following information for ZHOU Co. is for the Month Ended January 31, 2018.

Sales revenue, $370,000, Sales returns and allowances, $20,000, Sales discounts, 8,000, Cost of goods sold, 212,000, Salaries and wages expense, 60,000, Rent expense, 32,000, Insurance expense, 12,000, Freight-out, 7,000, interest expense, 500, investment dividend income, 1500, Income taxes are 40%.

1. Prepare a multiple income statement in good GAAP form

Answer 1

Solution:

ZHOU Co.
Income Statement
For the Month Ended January 31 ,2018
Sales		3,70,000
Less: sales discounts	8,000
Sales returns and allowances	20,000	28,000
Net sales (370000 - 28000)		3,42,000
Cost of goods sold		2,12,000
Gross profit (342000 - 212000)		1,30,000
Operating expenses:
Salaries and wages	60,000
Rent expense	32,000
Insurance expense	500
Total operating expenses (60000 + 32000+500)		92,500
Income from operations (130000 - 92500)		37,500
Other revenues and expenses:
Investment dividend Income		1,500
Income before tax (37500 + 1500)		39,000
Income tax (39000 x 40%)		15600
Net Income (39000 - 15600)		23,400