Question

Question: Based on the following transactions, complete this income statement:

Sales:

Operating Expense:

Depreciation Expense:

EBIT:

Intresrest Expense:

Pre-tax Income:

Taxes:

Net Income:

Dividened:

Paid to Retained Earning:

1. Earn $85,000 in sales revenue: $40,000 into Accounts Receivable and $45,000 in cash.

2. The sales require $50,000 worth of existing inventory. $20,000 of additional inventory is purchased on credit and applied to the Accounts Payable.

3. $30,000 is collected from Accounts Recievable.

4. $35,000 of the Accounts Payable is due this month and must be paid in cash.

5. The mortgage payment is $2,026.55 which includes the monthly interest of 12% APR

6. The plant is depreciated by $875 and the equipment is depreciated by $500

7. Salary, General, and Administrative expenses are $20,000 and are paid in cash.

8. The tax rate is 30% and is simply accumulated in the Taxes Payable Account and paid off at the end of the year, which is six months in advance.

Answer 1

No information is given about what % of net income paid as dividend in the question. so, dividend amount and Paid to Retained Earning can't be known without dividend payout information.

Particulars	Amount	Comments
Sales	$85,000.00	all cash and credit sales will be considered
Operating Expense	$70,000.00	$50,000 is cost of goods sold and $20,000 is SG&A expenses
Depreciation Expense	$1,375.00	both plant & equipment will be included
EBIT	$13,625.00
Intresrest Expense	$2,026.55
Pre-tax Income	$11,598.45
Taxes	$3,479.54
Net Income	$8,118.92

Calculations