The following balances were taken from the books of Carla Corp. on December 31,

Question

The following balances were taken from the books of Carla Corp. on December 31, 2017.

23,200

Assume the total effective tax rate on all items is 34%.

Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year.

Interest revenue $88,200 Accumulated depreciation—equipment $42,200 Cash 53,200 Accumulated depreciation—buildings 30,200 Sales revenue 1,382,200 Notes receivable 157,200 Accounts receivable 152,200 Selling expenses 196,200 Prepaid insurance 22,200 Accounts payable 172,200 Sales returns and allowances 152,200 Bonds payable 102,200 Allowance for doubtful accounts 9,200 Administrative and general expenses 99,200 Sales discounts 47,200 Accrued liabilities 34,200 Land 102,200 Interest expense 62,200 Equipment 202,200 Notes payable 102,200 Buildings 142,200 Loss from earthquake damage 152,200 Cost of goods sold 623,200 Common stock 502,200 Retained earnings

23,200

Explanation / Answer

Multiple-Step Income Statement Sales Revenue $1,382,200 Less: Sales Returns and allowances ($152,200)            Sales Discounts ($47,200) Net Sales Revenue $1,182,800 Cost of Goods Sold $623,200 Gross Profit $559,600 Operating Expenses: Selling Expenses $196,200 Administrative and general expenses $99,200 Total Operating expenses $295,400 Operating Profit $264,200 Non-operating Income/expenses: Interest Revenue $88,200 Interest Expense $62,200 Loss from Earthquake damage $152,200 Total Non-operating expenses $126,200 Profit before tax $138,000 Income tax @ 34% $46,920 Net profit $91,080 EPS $0.91

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