Question

The following calendar year-end information is taken from the December 31, 2019, adjusted trial balance and other records of Leone Company.

   

Advertising expense	$	30,000		Direct labor	$	673,600
Depreciation expense—Office equipment		10,300		Income taxes expense		293,900
Depreciation expense—Selling equipment		10,300		Indirect labor		58,000
Depreciation expense—Factory equipment		31,700		Miscellaneous production costs		9,200
Factory supervision		126,300		Office salaries expense		75,000
Factory supplies used		9,300		Raw materials purchases		998,000
Factory utilities		40,000		Rent expense—Office space		23,000
Inventories				Rent expense—Selling space		26,000
Raw materials, December 31, 2018		164,300		Rent expense—Factory building		82,600
Raw materials, December 31, 2019		181,000		Maintenance expense—Factory equipment		38,100
Work in process, December 31, 2018		16,200		Sales		4,495,600
Work in process, December 31, 2019		23,300		Sales salaries expense		391,600
Finished goods, December 31, 2018		167,200
Finished goods, December 31, 2019		143,200

2. Prepare the company’s 2019 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses.

Answer 1

		Leone Company
Income statement
Sales						4,495,600
cost of goods sold
Finished goods iventory,December 31,2018					167,200
Cost of goods manufactured					2,043,000
Goods available for sale					2,210,200
less:Finished goods inventory,December 31,2019					143,200
cost of goods sold						2,067,000
Gross profit from sales						2,428,600
Operating expenses
Selling expenses
Sales salaries expense					391,600
Depreciation expense-selling equipment					10,300
Rent expense-selling space					26,000
Advertising expense					30,000
Total selling expenses						457,900
General and administrative expensess
Rent expense-office space					23,000
office salaries expense					75,000
Depreciaiton expense-office equipment					10,300
Total general and administrative expense						108,300
total operating expense						566,200
income before taxes						1,862,400
income tax expense						293,900
Net income						1,568,500