Question

PB1.

LO 2.1Hicks Products produces and sells patio furniture through a national dealership network. They purchase raw materials from a variety of suppliers and all manufacturing, and assembly work is performed at their plant outside of Cleveland, Ohio. They recorded these costs for the year ending December 31, 2017. Construct an income statement for Hicks Products, to reflect their net income for 2017.

Answer 1

Hicks

Income Statement for the year ended December 31, 2017

$

Sales revenue 3,100,000

Cost of goods sold (1,700,000)

Gross profit 1,400,000

Administrative salaries (136,000)

Rent on corporate headquarters (65,000)

Advertisement and marketing (625,000)

Depreciation (90,000)

Net income 484,000

Step-by-step explanation:

Gross profit is calculated by deducting cost of goods sold from sales revenue. All the expenses will be deducted from the gross profit in order to obtain the net income for the year ended December 31, 2017.