10.00 polnts Home Entertainment is a small, family-owned business that purchases

Question

10.00 polnts Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for 51,500 each. The average cost of a television from the manufacturer is $900 Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows: Costs Selling Cost Formula 950 per month 40 per television sold Advertising Delivery of televisions Sales salaries and commissions $ 2.900 per month, plus 4% of sales Utilities Depreciation of sales facilities 3,000 per month 400 per month Administrative Executive salaries Depreciation of office $ 8,000 per month 500 per month $ 1,500 per month, plus S40 per television Clerical Insurance 400 per month During April, the company sold and delivered 150 televisions. Required 1. Prepare an income statement for April using the traditional format with costs organized by function. Traditional Income Statement For the Month Ended April 30 Selling and administrative expenses Selling expenses Total selling Administrative Total administrative expenses otal selling and administrative

Explanation / Answer

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Home entertinement Traditional income statement For the month ended April 30 Television sales         2,25,000 Cost of goods sold         1,35,000 Gross margin             90,000 Selling and administration expenses Selling expenses: Advertising                 950 Delevery of televisions             6,000 Sales salaries             2,900 Sales commissions             9,000 Utilities                 400 Depreciation of sales facilities             3,000 Total selling expenses           22,250 Administrative expenses: Executive salries             8,000 Derpreciation of office                 500 Clerical             7,500 Insurance                 400 Total administrative expneses           16,400 Total selling and administrative expenses             38,650 Net income             51,350

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