Question

Allstar Exposure designs and sells advertising services to small, relatively unknown companies. Last month, Allstar had sales commissions costs of $42,000, technology costs of $71,000, and research and development costs of $140,000. Selling expenses were $12,000, and administrative expenses equaled $30,000. Sales totaled $475,000. Required:1. Prepare an income statement for Allstar for the past month.2. Briefly explain why Allstar’s income statement has no line item for Cost of Goods Sold.Labels Add operating expenses For the Next Month For the Past Month Less operating expenses Amount Descriptions Administrative expenses Operating income Operating loss Research and development Sales commissions Sales revenue Selling expenses TechnologyTotal selling expenses1. Prepare an income statement for Allstar for the past month. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement. Be sure to complete the statement heading.

Answer 1

Answer: The answer is Net income $180,000

Step-by-step explanation:

All star Exposure

Monthly income Statement

$ $

Sales. 475,000

Less: Expenses

Sales commission 42,000

Technology cost 71,000

Research & Development cost 140,000

Selling Expenses 12,000

Administrative Expenses 30,000

---------------------

(295,000)

---------------------

Net income. 180,000

-----------------------

The All star income statement has no line item for cost of good sold because cost of good sold is a direct cost incurred by All star Exposure on the goods sold. it does not appear as part of the expenses in the income statement.