[The following information applies to the questions displayed below.] Sage Inc.

Question

[The following information applies to the questions displayed below.]

Sage Inc. experienced the following transactions for 2018, its first year of operations:

Issued common stock for $50,000 cash.

Purchased $140,000 of merchandise on account.

Sold merchandise that cost $110,000 for $250,000 on account.

Collected $236,000 cash from accounts receivable.

Paid $118,000 on accounts payable.

Paid $50,000 of salaries expense for the year.

Paid other operating expenses of $28,000.

Sage adjusted the accounts using the following information from an accounts receivable aging schedule:

Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance Current $ 10,000 0.01 030 2,000 0.05 3160 1,200 0.10 6190 500 0.20 Over 90 days 300 0.50 What is the income statement???

Explanation / Answer

Answer:

Working Note :

Sage Inc. Income Statement   For the year Ended December 31,2018 Sales        2,50,000 Less: Cost of Goods sold       -1,10,000 (Opening Inventory +Purchases-Closing Inventory) Gross profit        1,40,000 Less: Salaries          -50,000 Other Operating expenses          -28,000 Allowance for bad debts (Working note)               -570 Net Income            61,430

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