Question

1.

a. Prepare a multiple-step income statement for the year ended December 31, 20Y8. Enter all amounts as positive numbers EXCEPT in the Other revenue and expense section. In that section only, enter amounts that represent other expenses as negative numbers using a minus sign. • Refer to the Chart of Accounts for exact wording of account titles. • Refer to the Labels and Amount Descriptions for exact wording of text entries.

Income Statement data:
Advertising expense	$ 150,000
Cost of goods sold	3,700,000
Delivery expense	30,000
Depreciation expense-office buildings and equipment	30,000
Depreciation expense-store buildings and equipment	100,000
Income tax expense	140,500
Interest expense	21,000
Interest revenue	30,000
Miscellaneous administrative expense	7,500
Miscellaneous selling expense	14,000
Office rent expense	50,000
Office salaries expense	170,000
Office supplies expense	10,000
Sales	5,313,000
Sales commissions	185,000
Sales salaries expense	385,000
Store supplies expense	21,000

Retained earnings and balance sheet data:
Accounts payable	$ 194,300
Accounts receivable	545,000
Accumulated depreciation—office buildings and equipment	1,580,000
Accumulated depreciation—store buildings and equipment	4,126,000
Allowance for doubtful accounts	8,450
Bonds payable, 5%, due in 10 years	500,000
Cash	282,850
Common stock, $20 par
(400,000 shares authorized; 100,000 shares issued, 94,600 outstanding)	2,000,000
Dividends:
Cash dividends for common stock	155,120
Cash dividends for preferred stock	100,000
Goodwill	700,000
Income tax payable	44,000
Interest receivable	1,200
Inventory (December 31, 20Y8),
at lower of cost (FIFO) or market	778,000
Office buildings and equipment	4,320,000
Paid-in capital from sale of treasury stock	13,000
Excess of issue price over par:
-Common	886,800
-Preferred	150,000
Preferred 5% stock, $80 par
(30,000 shares authorized; 20,000 shares issued)	1,600,000
Premium on bonds payable	19,000
Prepaid expenses	27,400
Retained earnings, January 1, 20Y8	8,197,220
Store buildings and equipment	12,560,000
Treasury stock
(5,400 shares of common stock at cost of $33 per share)	178,200

Equinox Products, Inc.

Income Statement

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5	Selling expenses:
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14	Administrative expenses:
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Answer 1

Equinox Products, Inc.
Income Statement
For the Year Ended December 31, 20Y8
Revenue from sales:
Sales		$ 5,313,000
Less: Sales returns and allowances	$          -
Sales discounts	-	-
Net sales			$ 5,313,000
Cost of goods sold			3,700,000
Gross profit			$ 1,613,000
Operating expenses:
Selling expenses:
Sales salaries expense	$ 385,000
Sales supplies expense	$   21,000
Sales commissions	$ 185,000
Advertising expense	150,000
Depreciation expense—store buildings and equipment	100,000
Delivery expense	30,000
Miscellaneous selling expense	14,000
Total selling expenses		$    885,000
Administrative expenses:
Office salaries expense	$ 170,000
Office Rent expense	50,000
Depreciation expense—office buildings and equipment	30,000
Office supplies expense	10,000
Miscellaneous administrative expense	7,500
Total administrative expenses		267,500
Total operating expenses			1,152,500
Income from operations			$    460,500
Other income and expense:
Interest revenue		$      30,000
Interest expense		(21,000)	9,000
Income before income tax			469,500
Income tax expense			(140,500)
Net income			$    329,000