PB6-4 Preparing a Multistep Income Statement with Sales Discounts and Sales Retu
ID: 2392702 • Letter: P
Question
PB6-4 Preparing a Multistep Income Statement with Sales Discounts and Sales Returns and Allowances and Computing the Gross Profit Percentage [LO 6-5] The following information applies to the questions displayed below. Emily's Greenhouse Corporation is a local greenhouse organized 10 years ago as a corporation. The bookkeeper prepared the following statement (assume that all amounts are correct, but note the incorrect terminology and format): EMILY'S GREENHOUSE CORPORATION Profit and Loss December 31 Debit Credit $766,000 Sales Cost of Goods Sold Sales Returns and Allowances Sales Discounts Salaries and Wages Expense Office Expense Travel Expenses Income Tax Expense Net Profit $383,000 18,200 17,600 108,000 31,000 9,000 59,760 139,440 Totals $766,000 $766,000Explanation / Answer
Part 1:
EMILY’S GREENHOUSE CORPORATION
Income Statement
For the year Ended December 31
Sales Revenue
766000
Sales Return and Allowances
18200
Sales Discount
17600
Net Sales
730200
Cost of goods sold
383000
Gross Profit
347200
Expense
Salaries and Wages Expense
108000
Office Expense
31000
Travel Expense
9000
Income from Operations
199200
Income Tax Expense
59760
Net Income
139440
Part 2:
EMILY’S GREENHOUSE CORPORATION
Income Statement
For the year Ended December 31
Net Sales
730200
Cost of goods sold
383000
Gross Profit
347200
Expense
Salaries and Wages Expense
108000
Office Expense
31000
Travel Expense
9000
Income from Operations
199200
Income Tax Expense
59760
Net Income
139440
EMILY’S GREENHOUSE CORPORATION
Income Statement
For the year Ended December 31
Sales Revenue
766000
Sales Return and Allowances
18200
Sales Discount
17600
Net Sales
730200
Cost of goods sold
383000
Gross Profit
347200
Expense
Salaries and Wages Expense
108000
Office Expense
31000
Travel Expense
9000
Income from Operations
199200
Income Tax Expense
59760
Net Income
139440
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