Below is Salem Company’s income statement for 2018 that was
prepared by an inexperienced accountant. Salem Company Income
Statement As of December 31, 2018 Revenues: Sales revenue
……………..…………………………………… $298,000 Wages payable…………..………………………………………..
4,000 Gain on sale of investment…………………………………….. 5,250 Deferred
revenue………………………………………………. 2,500 Interest
payable………………………………………………… 1,000 Accumulated
depreciation……………………………………… 10,000 Total revenues
………………………………………………….. $320,750 Less operating expenses: Selling
expenses….……………………… …………………. $32,250 Research and development
expense………………….…….. 4,750 Prepaid advertising …….………………………………….
3,000 Indirect manufacturing labor cost..………………………… 16,200
Utilities expense..…. .....................………………………… 10,200 Direct
manufacturing labor cost....