PB64 Preparing a Multistep Income Statement with Sales Disco

PB6-4 Preparing a Multistep Income Statement with Sales Discounts and Sales Returns and Allowances and Computing the Gross Profit Percentage [LO 6-5] The following information applies to the questions displayed below. Emily\'s Greenhouse Corporation is a local greenhouse organized 10 years ago as a corporation. The bookkeeper prepared the following statement (assume that all amounts are correct, but note the incorrect terminology and format): EMILY\'S GREENHOUSE CORPORATION Profit and Loss December 31 Debit Credit $766,000 Sales Cost of Goods Sold Sales Returns and Allowances Sales Discounts Salaries and Wages Expense Office Expense Travel Expenses Income Tax Expense Net Profit $383,000 18,200 17,600 108,000 31,000 9,000 59,760 139,440 Totals $766,000 $766,000

Solution

Part 1:

EMILY’S GREENHOUSE CORPORATION

Income Statement

For the year Ended December 31

Sales Revenue

766000

Sales Return and Allowances

18200

Sales Discount

17600

Net Sales

730200

Cost of goods sold

383000

Gross Profit

347200

Expense

       Salaries and Wages Expense

108000

       Office Expense

31000

       Travel Expense

9000

Income from Operations

199200

Income Tax Expense

59760

Net Income

139440

Part 2:

EMILY’S GREENHOUSE CORPORATION

Income Statement

For the year Ended December 31

Net Sales

730200

Cost of goods sold

383000

Gross Profit

347200

Expense

       Salaries and Wages Expense

108000

       Office Expense

31000

       Travel Expense

9000

Income from Operations

199200

Income Tax Expense

59760

Net Income

139440

EMILY’S GREENHOUSE CORPORATION
Income Statement
For the year Ended December 31
Sales Revenue	766000
Sales Return and Allowances	18200
Sales Discount	17600
Net Sales	730200
Cost of goods sold	383000
Gross Profit	347200
Expense
Salaries and Wages Expense	108000
Office Expense	31000
Travel Expense	9000
Income from Operations	199200
Income Tax Expense	59760
Net Income	139440