Question

An inexperienced accountant prepared this condensed income statement for Blossom Company, a retail firm that has been in business for a number of years.BLOSSOM COMPANYIncome StatementFor the Year Ended December 31, 2017Revenues Net sales $1,054,000 Other revenues 27,2801,081,280Cost of goods sold 688,200Gross profit 393,080Operating expenses Selling expenses 135,160 Administrative expenses 127,720262,880Net earnings $130,200As an experienced, knowledgeable accountant, you review the statement and determine the following facts.1. Net sales consist of sales $1,129,640, less freight-out on merchandise sold $40,920, and sales returns and allowances $34,720.2. Other revenues consist of sales discounts $22,320 and rent revenue $4,960.3. Selling expenses consist of salespersons’ salaries $99,200; depreciation on equipment $12,400; advertising $16,120; and sales commissions $7,440. The commissions represent commissions paid. At December 31, $3,720 of commissions have been earned by salespersons but have not been paid. All compensation should be recorded as Salaries and Wages Expense.4. Administrative expenses consist of office salaries $58,280; dividends $22,320; utilities $14,880; interest expense $2,480; and rent expense $29,760, which includes prepayments totaling $7,440 for the first quarter of 2018.Prepare a correct detailed multiple-step income statement. Assume a 25% tax rate. (List other revenues before other expenses. Round answers to 0 decimal places, e.g. 5,125.)BLOSSOM COMPANYIncome Statement$:$$

Answer 1

$ 1.072,600 Net Sales Revenues

-$ 700,600 Cost of goods sold

$ 372,000 Gross PROFIT

-$ 375,720 Operating Expenses

$ 4,960 Other Revenues and Gains

-$ 2,480 Other expenses and Loss

-$ 3,720 INCOME FROM OPERATIONS

-$ 1,240 NET INCOME AFTER TAXES

-$ 1,550 Net INCOME

Step-by-step explanation:

2017 Income Statement

$ 1.129,640 Sales

-$ 22,320 Sales Discounts

-$ 34,720 Sales returns and allowances

$ 1.072,600 Net Sales Revenues

-$ 12,400 Depreciation expense

-$ 688,200 Cost of goods sold

-$ 700,600 Cost of goods sold

$ 372,000 Gross PROFIT

-$ 16,120 Advertising expense

-$ 58,280 Office Salaries

-$ 127,720 Administrative expense

-$ 110,360 Salaries and Wages Expenses

-$ 40,920 Freight out expenses

-$ 22,320 Rent Expenses

-$ 375,720 Operating Expenses

-$ 3,720 INCOME FROM OPERATIONS

$ 4,960 Rent Revenue

$ 4,960 Other Revenues and Gains:

-$ 2,480 Interest Expenses

-$ 2,480 Other expenses and Loss

-$ 1,240 NET INCOME AFTER TAXES

-$ 0,310 Income Tax Expenses 35%

-$ 1,550 Net INCOME