Question

Required information [The following information applies to the questions displayed below.) Assume that you are the president of Highlight Construction Company. At the end of the first year of operations (December 31), the following financial data for the company are available: Cash Receivables from customers (all considered collectible) Inventory of merchandise (based on physical count and priced at cost) Equipment owned, at cost less used portion Accounts payable owed to suppliers Salary payable (on December 31, this was owed to an employee who will be paid on January 10) Total sales revenue Expenses, including the cost of the merchandise sold (excluding income taxes) Income tax expense at 30% X pretax income: all paid during the current year Common stock (December 31) Dividends declared and paid during the current year $ 25, 300 12, 700 71,000 40,900 47, 340 2,900 130,000 87, 200 80, 700 11,000 (Note: The beginning balances in Common stock and Retained earnings are zero because it is the first year of operations.) Required: 1. Prepare a summarized income statement for the year. HIGHLIGHT CONSTRUCTION COMPANY Income Statement . . Accounts payable Cash Common stock Equipment

Answer 1

HIGHLIGHT CONSTRUCTION COMPANY
Income statement	Amount $
Total sales revenue	130,000
Less: Expense including COGS	87,200
Income before tax	42,800
Less: Income tax expense	12,840	(42,800*30%)
Net income	29,960