Question

Please how to get the answer and explain the steps to get the correct answer listed at the bottom in parenthesis

In 2017, Dangerous Dragon, Inc. (a retail clothing company) sold 587,766 units of its product at an average price of $15 per unit. The company reported estimated Returns and allowances 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 $9 per unit. Dangerous Dragon began 2017 with 85,000 units of its product in inventory (carried at an average cost of $9 per unit). Operating expenses (excluding depreciation) for Dangerous Dragon, Inc. in 2010 were $ 2,349,110 and depreciation expense was $ 114,372. 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> Answer: 135,892 x (119,172)

Answer 1

HI,

For the income Statement we first start with Gross Sales

Gross Sales = number of units sold*per unit price = 587766*15 = $8,816,490

Return = 3% of gross Sales

Hence Net Sales = 8816490*97% = $8,551,995.3

Total Bought units = 550000 at $9

Carry forward inventory= 85000 at $9

but since sold units are 587766 hence we will take cost also fro 587766 units only

So total Cost of good sold = 587766*9 = $5,289,894

So below will be total Income Statement and Net Income for Dangerous Dragon

So Net Income is $119,171.6 = $119,172

Thanks