Question

18. Based on the following account information, prepare a multi step statement of income.
Cash: $50,000

Prepaid expenses: $5,000
Accounts receivable: $70,000

Bad debt expense: $1,000
General and administrative expenses: $10,000

Net Sales: $900,000
Direct materials and direct labor expenses: $300,000

Selling and marketing expenses: $150,000
Income tax expense: $180,000

Interest income: $5,000
Interest receivable: $5,000

Retained earnings: $80,000
Accumulated depreciation: $5,000

Depreciation expense: $1,000

Answer 1

Answer-

INCOME STATEMENT
PARTICULARS	AMOUNT	AMOUNT
	$	$
Net Sales		900000
Less- Expenses
Direct material & direct labor expenses	300000
Bad debts expense	1000
General and administrative expenses	10000
Selling and marketing expenses	150000
Depreciation expense	5000
Total operating expenses		466000
Operating profit		434000
Add- Interest income		5000
Income from operations before income taxes		439000
Less- Income tax expense		180000
Net Income		259000