90.2K

Verified Solution

Link Copied!

An inexperienced accountant prepared this condensed income statement for Carla Vista Co., a retail firm that has been in business for a number of years. CARLA VISTA CO. Income Statement For the Year Ended December 31, 2017 Revenues Net sales $1,190,000 Other revenues 30,800 1,220,800 Cost of goods sold 777,000 Gross profit 443,800 Operating expenses Selling expenses 152,600 Administrative expenses 144,200 296,800 Net earnings $147,000 As an experienced, knowledgeable accountant, you review the statement and determine the following facts. 1. Net sales consist of sales $1,275,400, less freight-out on merchandise sold $46,200, and sales returns and allowances $39,200. 2. Other revenues consist of sales discounts $25,200 and rent revenue $5,600. 3. Selling expenses consist of salespersons salaries $112,000, depreciation on equipment $14,000, advertising $18,200, and sales commissions $8,400. The commissions represent commissions paid. At December 31, $4,200 of commissions have been earned by salespersons but have not been paid. All compensation should be recorded as Salaries and Wages Expense. 4. Administrative expenses consist of office salaries $65,800, dividends $25,200, utilities $16,800, interest expense $2,800, and rent expense $33,600, which includes prepayments totaling $8,400 for the first quarter of 2018. Prepare a correct detailed multiple-step income statement. Assume a 25% tax rate. (List other revenues before other expenses. Round answers to 0 decimal places, e.g. 5,125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Answer & Explanation Solved by verified expert

See Answer