Question

Left Time Exceoded Mahbub Abdulkadir: Attempt 1 Question 6 (6 points) In 2017, Dangerous Dragon, Inc. (a retail clothing company) sold 553,807 units of its product at an average price of $17 per unit. The company reported estimated Returns and allowances t in 2017 of 3 percent of gross revenue. Dangerous Dragon actually purchased 550,000 units of its product from its manufacturer in 2017 at an average cost of $ 12 per unit. Dangerous Dragon began 2017 with 85,000 units of its product in inventory (carried at an average cost of $ 12 per unit). Operating expenses (excluding depreciation) for Dangerous Dragon, Inc. in 2010 were $ 2,346,870 and depreciation expense was $ 124,799. Dangerous Dragon had $10,000,000 in debt outstanding throughout all of 2010. This debt carried an average interest rate of 6 percent. Finally, Dangerous Dragon's tax rate was 40 percent. Dangerous Dragon's fiscal year runs from January 1 through December 31. Given this information, construct Dangerous Dragon's 2010 multi-step income statement. What did Dangerous Dragon, Inc. record as NET INCOME on its 2010 income statement? Record your answer rounded to the nearest dollar. Do not include a dollar sign or commas in your answer. For example, record $1,234,567.89 as 1234568. For example, record $1,234,567.89 as 1234568 or negative $543,210 as-543210.</font color Your Answer Answer Previous Page Next Page Page 6 of 14

Answer 1

There is a mistake in question, when year 2017 is being mentioned as 2010.

Multi-step Income Statement:
For the Year ended Dec 31, 2017
		Amount $		Calculation
Sales Revenues		9414719		553807*17
Less: Sales ret. & allow.		282441.57		9414719*3%
Net Sales Revenues		9132277.43
Less:Cost of Goods sold:
Opening inventory	1020000			85000*12
add: Purchases	6600000			550000*12
Total inventory available	7620000
Less:Closing Inventory	1173687			(635000-553807*0.97)*12
Net Cost of Goods sold		6446313.48
Gross Income		2685963.95
Less:Operating expenses		2346870
Income before Dep.,Int. & Tax		339093.95
Less: Depreciation		124799
Income before Int. & Tax		214294.95
Less: Interest expense		600000		(10000000*6%)
Income before Tax		-385705.05
Less:taxes 0.40		-154282.02		(-385705*0.4) brought back tax incidence
Net Loss		-231423.03