Question

The following are selected ledger accounts of Waterway Corporation at December 31, 2017.

Cash		$186,300		Salaries and wages expense (sales)		$285,300
Inventory		536,300		Salaries and wages expense (office)		347,300
Sales revenue		4,276,300		Purchase returns		16,300
Unearned sales revenue		118,300		Sales returns and allowances		80,300
Purchases		2,787,300		Freight-in		73,300
Sales discounts		35,300		Accounts receivable		143,800
Purchase discounts		28,300		Sales commissions		84,300
Selling expenses		70,300		Telephone and Internet expense (sales)		18,300
Accounting and legal services		34,300		Utilities expense (office)		33,300
Insurance expense (office)		25,300		Miscellaneous office expenses		9,300
Advertising expense		55,300		Rent revenue		241,300
Delivery expense		94,300		Casualty loss (before tax)		71,300
Depreciation expense (office equipment)		49,300		Interest expense		177,300
Depreciation expense (sales equipment)		37,300		Common stock ($10 par)		901,300

Waterway’s effective tax rate on all items is 34%. A physical inventory indicates that the ending inventory is $687,300.

Prepare a condensed 2017 income statement for Waterway Corporation. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

		Amount $
	Net Sales revenue	4,160,700
	(4,276,300 -35,300 -80,300 )
	less: Cost of goods Sold	2,665,000
	(536,300 + 2,787,300 -28,300 -16,300 + 73,300 - 687,300 )
	Gross profit	1,495,700
	Less: Operating Expenses
	Selling Expenses (70,300 + 37,300 + 285,300 +18,300 +94,300 + 55,300 + 84,300 )	645,100
	Administrative expneses (34,300 + 49,300 +347,300 +33,300 +9,300 + 25,300 )	498,800
	Operating Profit	351,800
	Other revenue & Expenses
	Add: Rent revenue	241,300
	Less :Interest Expense	177,300
	Less :Casulty loss	71,300
	Earnings before tax	344,500
	less: tax @34%	117,130
	Net Income	227,370
	Earnings per share	$ 2.52	(227,370 /90,130 )