Question

The following are selected ledger accounts of Whispering Corporation at December 31, 2020.

Cash		$203,500		Salaries and wages expense (sales)		$312,400
Inventory		588,500		Salaries and wages expense (office)		380,600
Sales revenue		4,702,500		Purchase returns		16,500
Unearned sales revenue		128,700		Sales returns and allowances		86,900
Purchases		3,064,600		Freight-in		79,200
Sales discounts		37,400		Accounts receivable		156,750
Purchase discounts		29,700		Sales commissions		91,300
Selling expenses		75,900		Telephone and Internet expense (sales)		18,700
Accounting and legal services		36,300		Utilities expense (office)		35,200
Insurance expense (office)		26,400		Miscellaneous office expenses		8,800
Advertising expense		59,400		Rent revenue		264,000
Delivery expense		102,300		Casualty loss (before tax)		77,000
Depreciation expense (office equipment)		52,800		Interest expense		193,600
Depreciation expense (sales equipment)		39,600		Common stock ($10 par)		884,800

Whispering’s effective tax rate on all items is 20%. A physical inventory indicates that the ending inventory is $686,000.

Prepare a condensed 2020 income statement for Whispering Corporation. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

Whispering Corporation Income Statement For the Year Ended December 31, 2020
Sales Revenue		$4,702,500
Less: Sales Discounts	$37,400
Sales Returns and Allowances	$86,900	($124,300)
Net Sales		$4,578,200
Less: Cost of Goods Sold
Beginning Inventory	$588500
Purchases	$3,064,600
Add: Freight In	$79,200
Less: Purchases Discounts	($29,700)
Purchase Returns	($16,500)
Ending Inventory	($686,000)	($3,000,100)
Gross Profit		$1,578,100
Less: Operating Expenses
Selling Expenses:
Salaries and Wages Expense (Sales)	$312,400
Sales Commissions	$91,300
Selling Expenses	$75,900
Telephone and Interest Expenses (Sales)	$18,700
Delivery Expenses	$102,300	($600,600)
Administrative Expenses:
Accounting for Legal Services	$36,300
Insurance Expense (Office)	$26,400
Advertising Expense	$59,400
Depreciation Expense - Sales equipment	$39,600
Depreciation Expense - Office equipment	$52,800
Salaries and Wages Expense (Office)	$380,600
Utilities Expense (Office)	$35,200
Miscellaneous Office Expense	$8,800	($639,100)
Income From Operations		$338,400
Add: Rent Revenue		$264,000
		$602,400
Less: Other Expenses and Losses
Extraordinary Loss (Before Tax)	$77,000
Interest expense	$193,600	($270,600)
Income Before Tax		$331,800
Less: Tax at 20%		($66,360)
Net Income		$265,440