Question
irvity/54b?844b-… scenario: An inexperien Company, a retail firm that has been in business for a number of LEN ced accountant prepared this condensed income statement for Simon SIMON COMPANY Income Statement For the Year Ended December 31, 2017 Revenues Net sales Other revenues 872,000 17,000 109,000 st of goods sold Gross profit rating expenses Selling expenses Administrative expenses Net earnings $105,000 As an experienced, knowledgeable accountant, you review the statement and determine the following facts: 1. Net sales consist of. sales $911,000, less freight-out on merchandise sold $33,000, and 2. Other revenues consist of sales discounts $18,000 and rent revenue $4,000 3. Selling expenses consist of salespersons' salaries $80,000, depreciation on equipment sales returns and allowances $28,000 S10,000, advertising $13,000, and sales commissions $6,000. The commissions represent commissions paid. At December 21, $3,000 of commissions have been earned by salespersons but have not been paid. All compensation should be recorded as Salaries and Wages Expense c7 000 dividends S18 000, utilities
Explanation / Answer
Multistep income statement Sales revenue 911000 Sales return and allowance -28000 Sales discount -18000 Net sales revenue 865000 Less Cost of goods sold 555000 Gross profit 310000 Less Operating expense Selling expense Freight out 33000 Salaries and wages expense 80000 Depreciation of equipment 10000 Adverttising 13000 Commission 9000 Total selling expense 145000 Administrative expense 103000 Operating income 62000 Other income and expenses Other income (Rent revenue) 4000 Net earnings 66000
