The financial records of Cullumber Inc. were destroyed by fire at the end of 201

Question

The financial records of Cullumber Inc. were destroyed by fire at the end of 2017. Fortunately, the controller had kept certain statistical data related to the income statement as follows.

From the foregoing information prepare an income statement for the year 2017 in single-step form

1. The beginning merchandise inventory was $96,900 and decreased 20% during the current year. 2. Sales discounts amount to $18,700. 3. 30,530 shares of common stock were outstanding for the entire year. 4. Interest expense was $20,100. 5. The income tax rate is 30%. 6. Cost of goods sold amounts to $505,000. 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.

Explanation / Answer

Cullumber Inc. Single step Income statement For the year 2017 Sales 12,62,500 (101000/8%) Sales Discount        18,700 Gross Profit 12,43,800 Cost of Goods Sold         5,05,000 Administrative Expenses         1,01,000 (505000*20%) Selling Expenses         4,04,000 (4/5 of Operating exp. Or Admin Exp. * 4) Interest Expense            20,100 Total Expenses 10,30,100 Income before taxes     2,13,700 Taxes        64,110 (213700X30%) Net income     1,49,590

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