Exercise 4-4 The financial records of Sarasota Inc. were destroyed by fire at th

Question

Exercise 4-4 The financial records of Sarasota 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. I. The beginning merchandise inventory was $97,000 and decreased 20% during the current year. 2. Sales discounts amount to $18,700. 3. 29,020 shares of common stock were outstanding for the entire year. 4. Interest expense was $20,500. 5. The income tax rate is 30%. 6. Cost of goods sold amounts to $525,700. 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. From the foregoing information prepare an income statement for the year 2017 in single-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.) SARASOTA INC. Income Statement

Explanation / Answer

SARASOTA INC

INCOME STATEMENT

Revenue:

Sales [($100000 / 8%) - $18700] $1231300

Cost of goods sold ($525700)

Gross profit $705600

Administrative expenses ($105140)

Selling expense ($420560)

Earnings before tax $179900

Tax rate 30% ($53970)

Net income $125930

Earnings per share $4.34.

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