The following adjusted balances were taken from the ledger of EBC Trading on Dec

Question

The following adjusted balances were taken from the ledger of EBC Trading on December 31, 2016, Cash 350,000. Accounts Receivble 33,950. Interest Receivable 1,500. Merchandise, January 1 , 50,000, Supplies 2,650. prepaid rent 40,000. equipment 75,000. Accumulated depreciation 25,000. Accounts payable 15,000. Notes Payable 10,000. interest payable 1,000. E. Capital 50,000. E Drawing 10,000. B Capital 75,000. B Drawing 15,000. C Capital 100,000. Sales 980,650. Sales Discount 5,500. Sales returns 3,500. Purchases455,000. Purchase returns 7,500.Purchase discount 3,300. Sales Salary Expenses 97,000. Supplies Expense 16,600.Rent expense 80,000. Utilities expense 24,000. Insurance expense 8,250.interest expense 1,000. interest income 1,500. Total 1,268,950. Prepare the Income Statement in good form. For the year ended December 31, 2016

Explanation / Answer

Income statement of EBC trading for the year ended December 31, 2016

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Particulars Amount Amount Total revenue (1) Income from operations a. Gross sales 980,650 b. Sales discount 5,500 c. Sales returns 3,500 Net sales (A - b - c) 971,650 (2) Income from other than operations 1,500 Total revenue (1 + 2) 973,150 Less: Cost of goods sold a. Purchases 455,000 b. Purchases returns 7,500 c. Purchase discounts 3,300 Cost of goods sold (a - b - c) (444,200) Gross profit = (1 - 2) 528,950 Less: Operting , selling and Administrative expenses Sales Salary Expenses 97,100 Supplies Expense 16,600 Rent expense 80,000 Utilities expense 24,000 Insurance expense 8,250 interest expense 1,000 Total Expenses (226,950) Net profit/(loss) (Gross profit - Total expenses) 302,000

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