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Using the following accounts, prepare an Income Statement Accounts receivable $ 237,000 Inventory 243,000 Accounts payable...

Using the following accounts, prepare an Income Statement

Accounts receivable $ 237,000
Inventory 243,000
Accounts payable 89,000
Notes payable 169,000
Cash 95,000
2,080,976 Sales (Sales = Income)
Interest expense 19,296
Fixed assets 500,000
87,000 Accruals (accumulated)
188,000 Long Term Debt
255,000 Comon stock (common equity)
40% Taxes
212,000 Retained earnings
75,000 Accumulated depreciation

Solutions

Expert Solution

Income statement for the year ended

Particulars Amount in $
Income 2,080,976
Less Interest expenses (19,296)
Income before taxes 2,061,680
Less Taxes (2,061,680 × 40%) (824,672)
Income after taxes 1,237,008

Note :

1. It is assumed that the income i.e. $ 2,080,976 is before interest expenses as it is given separately.

If it is assumed that the interest expenses is already deducted from the amount of income i.e. $ 2,080,976 then the income statement will be as follows:

Particulars Amount in $
Income before taxes 2,080,976
Less Taxes (2,080,976 × 40%) (832,390)
Income after taxes 1,248,586

Figures are rounded to nearest dollar.

2. Income = sales given in the question so directly started from income in the income statement.

3. All other accounts are related to balance sheet items.

jeff jeffy answered 3 years ago
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