Question

Income statement information for Bridgeport Tire Repair Corporation for the year 2017 follows:

General and administrative expenses:					Freight-in			$13,000
	Salaries and wages expense		$36,900		Purchase discounts			10,000
	Depreciation expense—building		28,500		Dividend revenue			20,000
	Office supplies expense		9,600		Inventory (beginning)			114,000
Inventory (ending)			140,000		Sales returns and allowances			18,000
Loss—other (due to flood damage)			52,000		Service expenses:
Gain on the sale of equipment			5,600			Salaries and wages		72,000
Purchases			570,000			Depreciation expense—garage equipment		18,000
Sales revenue			960,000			Garage supplies expense		9,000
Interest expense			9,000

The effective tax rate on all income is 33%, and Bridgeport applies ASPE.

Prepare a multi step income state.

Answer 1

S 960.000 Bridgeport Tire Repair Corporation Income Statement For the Year Ended 2017 Sales Revenue Sales revenue Less: Sales returns and allowances Net sales revenue Cost of Goods Sold Merchandise inventory, Beginning $ 114.000 Purchases $570,000 Less purchase discounts S 10.000 Net purchases $560,000 Add freight-in S 13,000 $573,000 Total merchandise available for sale $687,000 Less merchandise inventory, Ending $ 140,000 Cost of goods sold Gross profit Operating Expenses Service expenses: Salaries and wages S 72.000 Depreciation expense garage equipment | $ 18,000 Garage supplies expense $ 9,000 S 547,000 $ 413,000

$ 99,000 S 36,900 $ 28,500 $ 9,600 $ 75,000 $ 174.000 $ 239,000 Total Service expenses General and administrative expenses: Salaries and wages expense Depreciation expense building Office supplies expense Total General and administrative expenses: Total Operating Expenses Income from operations Other Expenses and Losses Loss-other (due to flood damage) Interest expense Other Revenues and gains Gain on the sale of equipment Dividend revenue Income before Income taxes Less: income tax Expenses Net income $ 52,000 $ 9,000 S 61,000 $ 5,600 $ 20,000$ 25,600 S 203,600 $ 67,188 $ 136,412 Notes: Income tax Expenses = $203,600*33% = $67,188