Question

The financial records of Wildhorse Inc. were destroyed by fire at the end of 2020. Fortunately, the controller had kept certain statistical data related to the income statement as follows. 1. The beginning merchandise inventory was $82,800 and decreased 20% during the current year. 2. Sales discounts amount to $16,320. 3. 27,288 shares of common stock were outstanding for the entire year. 4. Interest expense was $20,800. 5. The income tax rate is 30%. 6. Cost of goods sold amounts to $620,000. 7. Administrative expenses are 20% of cost of goods sold but only 8% of gross sales. 8. Four-fifths of the operating expenses relate to sales activities. From the foregoing information prepare an income statement for the year 2020 in single-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

Administrative expenses = 20% of $620000 = $124000
8% of sales = $124000
Sales = $1550000

Revenues
Sales Revenue		$       15,50,000
Expenses
Sales Discount	$           16,320
Cost of Goods Sold	$       6,20,000
Interest Expense	$           20,800
Administrative expense	$       1,24,000
Total Expenses		$         7,81,120
Income before income tax		$         7,68,880
Income tax expense		$         2,30,664
Net Income		$         5,38,216
Earning per share		$              19.72	=538216/27288