Question

Psymon Company, Inc., sells construction equipment. The annual fiscal period ends on December 31. The following adjusted trial balance was created from the general ledger accounts on December 31: Account Titles Debits Credits Cash $ 42,000 Accounts Receivable 18,000 Inventory 65,000 Property and Equipment 50,000 Accumulated Depreciation $ 21,000 Accounts Payable 30,000 Common Stock 90,000 Retained Earnings, January 1 11,600 Sales Revenue 167,000 Cost of Goods Sold 98,000 Salaries and Wages Expense 17,000 Office Expenses 18,000 Interest Expense 2,000 Income Tax Expense 9,600 Totals $ 319,600 $ 319,600

1. Prepare a multistep income statement that would be used for external reporting purposes. TIP: Some of the accounts listed will appear on the balance sheet rather than the income statement.

Answer 1

Psymon Company, Inc.
Income Statement
For the year ended Dec 31,
Sales Revenue	$ 167,000.00
Cost of Goods Sold	98,000
Gross Profit	69,000
Operating Expenses
Salaries and Wages	17,000
Office Expenses	18,000
Total Operating Expenses	35,000
Operating Income	34,000
Interest Expense	2,000
Profit before Taxes	32,000
Tax Expense	9,600
Net Income	22,400