Question

Based on the trial balance below create an Income Statement:

Dividends Given: $1,607,500

ACCT #	Account Name	Debit	Credit
1000	Cash	$402,575
1030	Treasury Bills	$100,000
1031	Municiple Bonds	$104,425
1032	Investments	$770,500
1210	Accounts Receivable	$30,000
1400	Inventory	$20,000
1500	Furniture and Fixtures	$0
1599	Accumulated Depreciation		$30,000
2000	Accounts Payable	$40,000
3000	Common Stock		$0
3500	Retained Earnings	$65,000
4000	Gross Sales		$3,900,000
4100	Sales Returns	$20,000
5000	Cost of Goods Sold	$1,080,000
6000	Legal and Professional Fees	$20,000
6020	Advertising Expense	$50,000
6080	Charitable Contributions	$79,000
6150	Premiums on Key Person Life Insurance Policy	$45,500
6500	Rent Expense	$120,000
6600	Employee Wages	$150,000
6601	Officer Salaries	$400,000
7010	Interest Income: Taxable		$10,000
7011	Interest Income: Non‐Taxable		$7,000
7020	Dividend Income		$30,000
8100	Depreciation	$30,000
8200	Interest Expense	$50,000
9000	Federal Income Tax Expense	$360,000
9010	State Income and Payroll Taxes Paid	$40,000
		$3,977,000	$3,977,000

Answer 1

Income Statement
Sales	39,00,000
Less: Sales Return	20,000
	38,80,000
Less: COGS	10,80,000
Gross Profit		28,00,000
Operating expenses
Advertising expense	(50,000)
Depreciation	(30,000)
Legal and Professional Fees	(20,000)
Rent Expense	(1,20,000)
Employee Wages	(1,50,000)
Officer Salaries	(4,00,000)	7,70,000
Operating income	Gross profit - Operating expenses	20,30,000
Other incomes/expenses
Interest Expense		(50,000)
Interest Income: Non‐Taxable		7,000
Interest Income: Taxable		10,000
Dividend Income		30,000
Income before tax		20,27,000
Federal Income Tax Expense		(3,60,000)
State Income and Payroll Taxes Paid		(40,000)
Net income after tax		16,27,000