Financial statement data for Daryl’s Dog Houses, Inc. are given below. All figur

Question

Financial statement data for Daryl’s Dog Houses, Inc. are given below. All figures are in dollars. Use this
data to construct an Income Statement for the year ending December 31, 2010 and use your constructed
statement to answer the following 4 questions.
General and administrative expenses 741,580
Beginning of year inventory 1,248,790
Research and development 541,250
Taxes 754,610
Depreciation 218,730
Purchases 1,457,880
Lease payments 698,650
Interest expense 876,420
End of year inventory 1,178,960
Advertising 456,320
Management salaries 1,487,560
Gross sales 8,456,210
Returns and allowances 18,410
1. What was gross profit from Daryl’s Dog Houses, Inc.’s income statement for the year ending December
31, 2010?
2. What was operating profit (i.e., EBIT) from Daryl’s Dog Houses, Inc.’s income statement for the year
ending December 31, 2010?
3. What was profit before taxes (i.e., EBT) from Daryl’s Dog Houses, Inc.’s income statement for the year
ending December 31, 2010?
4. What was net income from Daryl’s Dog Houses, Inc.’s income statement for the year ending December
31, 2010

Explanation / Answer

Daryl’s Dog Houses, Inc.
Income Statement for the year ended Dec. 31, 2010
__________________________________________________
Gross Sales                                                             $8,456,210
Less : Returns & Allowances                                        $18,410
Net Sales                                                                $8,437,800

Cost of goods sold
Begining Inventory                $1,248,790
Add: Purchases                    $1,457,880
Less : Ending Inventory     ($1,178,960)                  $1,527,710
Gross Profit                                                         $6,910,090

General and administrative expenses $741,580
Management salaries                     $1,487,560
Advertising                                      $456,320
Research and development                $541,250
Lease payments                               $698,650
Depreciation                                   $218,730          $4,144,090
  Earnings before Interest & Taxes (EBIT)              $2,766,000                    
Interest expense                                                         $876,420
Earnings before Taxes (EBT)                               $1,889,580
Taxes                                                                         $754,610
Net Income                                                         $1,134,970
                                                                             ===========

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