Question

22. Using the below adjusted trial balance Dec 31st for the year end prepare an income statement that begins with gross sales and includes separate categories to calculate net sales, cost of goods sold, and combines selling and general administrative expenses.

			DEBIT		CREDIT
Inventory			$              800
Other Assets			$          2,600
Total Liabilities					$              500
Common Stock					$              400
Retained Earnings					$          1,700
Dividends			$              300
Sales					$          9,500
Sales Discounts			$              260
Sales returns and allowance			$              240
Cost of goods sold			$          6,500
Sales salaries expense			$              450
Rent expense selling space			$              400
Supplies expense			$                30
Advertising expense			$                20
Office Salaries expense			$              420
Interest expense			$                  8
Income taxes			$                72
TOTAL			$        12,100		$        12,100

Answer 1

Income Statement (Multi Step)
Sales Revenue	$              9,500
Less Sales Returns and Allowances	$                  240
Less Sales Discounts	$                  260
Net Sales Revenue		$              9,000
Cost of Goods Sold		$              6,500
Gross Profit		$              2,500
Operating Expenses
Sales Salaries Expense	$                  450
Rent Expense	$                  400
Supplies Expense	$                    30
Advertising Expense	$                    20
Office Salaries Expense	$                  420
Total Operating Expenses		$              1,320
Net Operating Income		$              1,180
Other Income (Expenses)
Interest Expense		$                     (8)
Income before income tax		$              1,172
Income Tax expense		$                    72
Net Income		$              1,100