Question

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

Cash		$188,580		Salaries and wages expense (sales)		$287,580
Inventory		538,580		Salaries and wages expense (office)		349,580
Sales revenue		4,278,580		Purchase returns		18,580
Unearned sales revenue		120,580		Sales returns and allowances		82,580
Purchases		2,789,580		Freight-in		75,580
Sales discounts		37,580		Accounts receivable		146,080
Purchase discounts		30,580		Sales commissions		86,580
Selling expenses		72,580		Telephone and Internet expense (sales)		20,580
Accounting and legal services		36,580		Utilities expense (office)		35,580
Insurance expense (office)		27,580		Miscellaneous office expenses		11,580
Advertising expense		57,580		Rent revenue		243,580
Delivery expense		96,580		Casualty loss (before tax)		73,580
Depreciation expense (office equipment)		51,580		Interest expense		179,580
Depreciation expense (sales equipment)		39,580		Common stock ($10 par)		903,580

Monty’s effective tax rate on all items is 34%. A physical inventory indicates that the ending inventory is $689,580.

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

Answer 1

Solution:

Income Statement - Monty Corporation
For the year ended December 31, 2017
Particulars	Details	Amount
Revenue:
Sales revenue	$4,278,580.00
Sales Discount	-$37,580.00
Sales Returnes and Allowances	-$82,580.00	$4,158,420.00
Cost of Goods Sold:
Opening Inventory	$538,580.00
Purchases	$2,789,580.00
Purchase discount	-$30,580.00
Purchase returns	-$18,580.00
Freight In	$75,580.00
Ending Inventory	-$689,580.00	$2,665,000.00
Gross Profit		$1,493,420.00
Selling Expenses:
Selling Expense	$72,580.00
Advertising Expense	$57,580.00
Delivery Expense	$96,580.00
Depreciation Expense (Sales Equipment)	$39,580.00
Salaries & Wages Expenses (Sales)	$287,580.00
Sales Commission	$86,580.00
Telephone and internet expense (Sales)	$20,580.00	$661,060.00
Administrative Expenses:
Accounting and legal services	$36,580.00
Insurance Expense	$27,580.00
Depreciation Expense (Office Equipment)	$51,580.00
Salaries & Wages Expenses (Office)	$349,580.00
Utilities Expense	$35,580.00
Miscellenous Office Expense	$11,580.00	$512,480.00
Operating Income		$319,880.00
Other Income:
Rent Revenue		$243,580.00
Extraordinary Items:		$73,580.00
Casualty loss
Earning before interest and taxes (EBIT)		$489,880.00
Interest Expense		$179,580.00
Earning Before Tax (EBT)		$310,300.00
Income Tax Expense (34%)		$105,502.00
Net Income		$204,798.00
Number of shares outstanding (903580/10)		90358
Earning Per Share (EPS)		$2.27