[The following information applies to the questions displayed below Assume that

Question

[The following information applies to the questions displayed below Assume that you are the president of Highlight Construction Company. At the end of the first year (December 31, 2014) of operations, the following financial data for the company are available Cash Receivables from customers (all considered collectible) Inventory of merchandise (based on physical count and priced at cost) Equipment owned, at cost less used portion Accounts payable owed to suppliers Salary payable for 2014 (on December 31, 2014, this was owed to an employee $ 24,800 11,400 78,000 42,400 46,640 who was away because of an emergency; will return around January 10, 2015, 2,200 125,000 82,200 at which time the payment will be made) Total sales revenue Expenses, including the cost of the merchandise sold (excluding income taxes) Income taxes expense at 30% x pretax income, all paid during 2014 Common stock (December 31, 2014) Dividends declared and paid during 2014 89,000 11,200 Note: The beginning balances in Common stock and Retained earnings are zero because it is the first year of operations.) 1.00 points Required 1. Prepare a summarized income statement for the year 2014 HIGHLIGHT CONSTRUCTION COMPANY Income Statement For the Year Ended December 31, 2014

Explanation / Answer

HIGHLIGHT CONSTRUCTION COMPANY Income Statement For the Year Ended December 31, 2014 Total sales revenue (given)         1,25,000 Total expenses (given)            82,200 Pretax income            42,800 Income tax expense ($42,800 x 30%)            12,840 Net income            29,960

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