Question

Income Statement: Use the following financial information to prepare an income statement: Beginning Inventory, Jan 1 Supplies 1 Income Tax Ending Inventory, Dec. 31 Depreciation Misc. expense 1 Light, heat, & power Burger Shack, Inc. 2 00,000 Advertising 2 ,000 Insurance 25% of income before tax Merchandise purchases 2 30,000 Sales Salaries 1,500 Rent 2 ,000 Net Sales 12,000 Office Salaries 18,000 1.500 440,000 57,000 28,000 700,000 100,000 Burger Shack, Inc. Income Statement E Net Sales Cost of Goods Sold: Goods Available for Sale Cost of Goods Sold Gross Profit Sales Expenses General and Administrative Expenses Total Operating Expenses Income before Taxes Income Tax (25%) Net Income

Answer 1

The income statement of Burger Shack, Inc. is shown as follows:-

Burger Shack, Inc.

Income Statement (Amounts in $)

Net Sales (A)		700,000
Cost of goods sold:
Beginning Inventory, Jan 1	200,000
Merchandise purchases	440,000
Goods available for sale	640,000
Ending Inventory, Dec 31	(230,000)
Cost of Goods Sold (B)		410,000
Gross Profit (C = A-B)		290,000
Sales Expenses
Sales Salaries	57,000
Advertising	18,000
General and Administrative Expenses
Supplies	2,000
Depreciation	1,500
Misc. Expenses	2,000
Light, Heat & Power	12,000
Insurance	1,500
Rent	28,000
Office Salaries	100,000
Total Operating Expenses (D)		222,000
Income Before Taxes (C-D)		68,000
Income Tax (25%) ($68,000*25%)		(17,000)
Net Income		51,000

Therefore the net income for the year ending Dec 31 is $51,000.