Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells the

Question

Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,497 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianos to its customers at an average price of $2,200 each. The selling and administrative costs that the company incurs in a typical month are presented below:

Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,497 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianos to its customers at an average price of $2,200 each. The selling and administrative costs that the company incurs in a typical month are presented below:

Required: 1. Prepare an income statement for Marwick's Pianos, Inc., for August. Use the traditional format, with costs organized by function. Marwick's Pianos, Inc. Traditional Income Statement For the Month of August Selling and administrative expenses Selling expenses: Total selling expenses Administrative expenses: Total administrative expenses Total selling and administrative expenses 0

Explanation / Answer

Marwick's Pianos Inc.

Income Statement for August

$ $ Sales 123,200 Cost of goods sold 83,832 Gross profit 39,368 Less Selling expenses Advertising 944 Sales salaries and commissions 10,981 Delivery expense 3,472 Utilities expense 652 Depreciation expense 4,977 Total selling expenses 21,026 Administrative expenses Executive salaries 13,401 Insurance 690 Clerical 4,825 Depreciation expense 917 Total administrative expenses 19,833 Total selling and administrative expenses 40,859 Net operating income / (loss) (1,491)

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