Question

Exercise 4-07 a-b The accountant of Whispering Shoe Co. has compiled the following information from the company's records as a basis for an income statement for the year ended December 31, 2020. Rent revenue $31,000 Interest expense 20,000 Market appreciation on land above cost 33,000 Salaries and wages expense (selling) 116,800 Supplies expense (selling) 19,600 Income tax 25,100 Salaries and wages expense (administrative) 137,900 Other administrative expenses 53,700 Cost of goods sold 498,000 Net sales 982,000 Depreciation on plant assets (70% selling, 30% administrative) 67,000 Cash dividends declared 18,000 There were 20,000 shares of common stock outstanding during the year.

Answer 1

Whispering Shoe Multi-step Income Statement Net Sales revenue Cost of goods sold Gross proft $ $ $ 982,000 498,000 484,000 $ 183,300 Operating expense Selling expenses Wages and salaries $ 116,800 Depr. exp. (70% X $67,000) $ 46,900 Supplies expense $ 19,600 Total Selling expenses Administrative expenses Wages and salaries $ 137,900 Other admin. expenses $ 53,700 Depr. exp. (30% x $67,000) $ 20,100 Total Administrative expenses Total Operating expense $ 211,700 $ 395,000 $ 89,000 Operating Income Other revenues & income Rental revenue $ $ 31,000 120,000 Other Expenses&loses Interest expense $ 20,000 Income before tax Income tax $ $ 100,000 25,100 Net Income $ 74,900

Whispering Shoe Single-step Income Statement Revenues & Gains Net sales Rent revenue Total Revenues& gains $ 982,000 $ 31,000 $1,013,000 Expenses & Losses Cost of goods sold Selling expenses Administrative expenses Interest expense Total Expenses & losses $ 498,000 $ 183,300 $ 211,700 $ 20,000 $ 913,000 116,800 + 19,600 + (67,000 x 70%) 137,900 + 53,700 + (67,000 x 30%) Income before tax Income tax $ 100,000 $ 25,100 Net Income (loss) $ 74,900