Question

Based on the Income statement of The Clothing Outlet Inc., provide the total Net Income for the 12-month period ending December 31, 2017.

The following account balances are available for The Clothing Outlet, Inc., a discount retailer, as of and for the year ended December 31, 2017, except for the retained earnings balance which is stated below as of January 1, 2017:

Cash………………………………..….$5,500,000

     Accounts receivable……………………...$9,000,000

Marketable securities….……………..…$14,000,000

Prepaid insurance……..……………..……$400,000

Inventory………………..………………$4,000,000

Equipment………………..……………..$7,000,000

Accumulated depreciation: equipment….$3,000,000

Buildings……………………………….$20,700,000

Accumulated depreciation: buildings…...$5,000,000

Land…………………………………....$4,000,000

Investments (long-term)………………..$4,000,000

Patents (net)……………………………....$800,000

Accounts payable…………………..……$5,000,000

Income taxes payable……………………$1,600,000

Salaries payable…………………………$1,000,000

Dividends payable….……………………$2,000,000

Interest payable…….……….……………..$500,000

Notes payable (long-term)…..……….….$2,400,000

Bonds payable (long term)……….…….$6,000,000

Common stock………………………….$10,100,000

Retained Earnings (as of Jan. 1, 2017)...$8,400,000

Dividends declared………………………$5,000,000

Sales…………………………………….$108,000,000

Cost of goods sold………………………$32,600,000

Interest revenue…………………………$2,500,000

Interest expense…………………………$1,500,000

Income tax expense……(calculated @ 40%)

                             Selling expenses:

Sales salaries and commissions…………$6,000,000

Insurance expense………………………...$1,600,000

Advertising expense…………………........$3,500,000

Utilities expense…………………………..$4,000,000

Depreciation expense: equipment…………..$400,000

Delivery expense…………………………....$500,000

                            General and administrative expenses:

Executive and administrative salaries……$5,800,000

Utilities expense…………………………...$4,200,000

Rental expense……………………………….$900,000

Depreciation expense: buildings…………….$500,000

Answer 1