1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
AVprozaik [17]
3 years ago
10

Cost of Goods Sold and Income Statement Schuch Company presents you with the following account balances taken from its December

31 adjusted trial balance:
Inventory, January 1 $40,000 Purchases returns $3,500
Selling expenses 35,000 Interest expense 4,000
Purchases 110,000 Sales discounts taken 2,000
Sales 280,000 Gain on sale of property (pretax) 7,000
General and administrative expenses 22,000 Freight-in 5,000

Additional data:
1. A physical count reveals an ending-inventory of $22,500 on December 31.
2. Twenty-five thousand shares of common stock have been outstanding the entire year.
3. The income tax rate is 30% on all items of income.

Required:
a. As a supporting document for Requirements 2 and 3, prepare a separate schedule for Schuch's cost of goods sold.
b. Prepare a 2013 multiple-step income statement.
c. Prepare a 2013 single-step income statement.
Business
1 answer:
mario62 [17]3 years ago
6 0

Answer:

Schuch Company

a) Schedule of Cost of Goods Sold

Inventory, January 1                      $40,000

Purchases                                       110,000

Purchases returns                           -3,500  

Freight-in                                           5,000

Cost of goods available for sale $151,500

less Inventory, December 31         22,500

Cost of goods sold                     $129,000

b) Multi-step Income Statement

For the year ended December 31, 2013:

Net Sales Revenue                    $278,000

Cost of Goods Sold                      129,000

Gross profit                                $149,000

Expenses:

Selling expenses          35,000

General & admin exp.  22,000    57,000

Operating profit                         $92,000

Interest expense                            4,000

Income after interest expense $88,000

Gain on sale of property (pretax)  7,000

Comprehensive income before tax $95,000

Income Tax (30%)                                28,500

Net income                                       $66,500

EPS = $2.66

c) Single-step Income Statement

For the year ended December 31, 2013:

Net Sales Revenue                    $278,000

Gain on sale of property (pretax)    7,000

Total revenue and gains          $285,000

Cost of Goods Sold     129,000

Selling expenses          35,000

General & admin exp.  22,000

Interest expense            4,000

Total expenses                         $190,000

Income before taxes                 $95,000

Income Taxes (30%)                    28,500

Net income                                $66,500

EPS = $2.66

Explanation:

a) Data and Calculations:

December 31 adjusted trial balance:

Inventory, January 1 $40,000

Purchases returns $3,500

Selling expenses 35,000

Interest expense 4,000

Purchases 110,000

Sales discounts taken 2,000

Sales 280,000

Gain on sale of property (pretax) 7,000

General and administrative expenses 22,000

Freight-in 5,000

Additional data:

Ending Inventory $22,500

Common Stock outstanding = 25,000

Income tax rate = 30%

Sales                       $ 280,000

Sales discounts taken   2,000

Net Sales Revenue $278,000

You might be interested in
Which of the following statements is CORRECT?
Lera25 [3.4K]

Answer:

c. The "apparent," but not necessarily the "true," financial position of a company whose sales are seasonal can change dramatically during a given year, depending on the time of year when the financial statements are constructed.

Explanation:

Financial statements are used to show the financial activity of a business within a given period.

One of the principles of a accounting is periodicity. This requires businesses to report their financial position at regular intervals consistently, and not in an inconsistent manner. So if a business reports their finances twice a year. At year end and at mid year, it is possible that at mid year due to seasonal sales performance will be high and business is perceived to be highly profitable.

But financial report at end of year in the off-season will show low performance.

So for seasonal businesses there can be apparent view of a business during the year that can change dramatically because of time at which reports are made.

3 0
3 years ago
Taxicab fares in most cities are regulated. Several years ago taxicab drivers in Boston obtained permission to raise their feres
Scorpion4ik [409]

Solution:

Let's start by assuming that the taxi ride demand is extremely elastic, to the extent that it is vertically sluggish! If the cabbies raise the fair price by 10% from 10.00 per mile to 11.00 per kilometre, the number of riders remains 20.

Total income before fair growth= 20* 10= 200.

Total income following fair growth = 11* 20= 220.

A 10% increase in the fare therefore leads to a 10% increase in the driver's revenue.

Therefore, the assumption in this situation is that the cab drivers think the taxi driving requirement is highly inelastic.

The demand curve facing the drivers of the cab is still inelastic, but not vertically bent.

When the rate increased from 10% to 11, riders declined from 20% to 19%

Total revenue before fair growth is 20* 10= 200

The gap between revenue and fair growth is 19* 11= 209

This means that a realistic 10% raise doesn't result in a 10% boost on income Because the market curve for taxi rides is not 100% inelastic, but rather low inelastic, so that a fair increase (control) allows consumers to lose their incomes.

7 0
3 years ago
If an employer does not offer a retirement plan, what might be another way to save for retirement?
Luda [366]
If an employer does not offer a retirement plan, the best option that an employee can do is to invest in an insurance company that can offer such service. There are insurance companies that not only guarantee a person's investment on health, travel, and recreation, there are also those that give opportunities for people who are seeking to retire from their work. 
4 0
3 years ago
For effective price discrimination to occur, a seller must:
Bess [88]

Answer:

In order for effective price discrimination to occur, the seller must have a downward sloping demand curve.  

Explanation:

The seller must also have at least two identifiable groups of customers with price elasticities of demand for the product, and the seller must be able to prevent customers from reselling the product.

8 0
3 years ago
How does a market economy operate?
Tanya [424]

Answer:

The principle of market economy dictates that producers and sellers of goods and services will offer them at the highest possible price that consumers are willing to pay for goods or services. When the level of supply meets the level of demand, a natural economic equilibrium is achieved.

Explanation:

5 0
3 years ago
Other questions:
  • Financial educators often recommend that individuals should:
    8·1 answer
  • How many european union countries use the euro as their official currency?
    6·1 answer
  • A stock sells for $6.99 on December 31, providing the seller with a 6% annual return. What was the price of the stock at the beg
    8·1 answer
  • Noah graduated with his B.A. in early childhood education in December, but public schools are not hiring until spring.
    13·1 answer
  • The Bensington Glass Company entered into a loan agreement with the​ firm's bank to finance the​ firm's working capital. The loa
    13·1 answer
  • John Williams, manager of Phoenix Entertainment, wants to compute the variable overhead efficiency variance for the year. He has
    9·1 answer
  • Suppose that a cafe enjoys a large increase in customers whenever the jazz club next door features a band playing appealing musi
    8·1 answer
  • The Corner Hardware has succeeded in increasing the amount of goods it sells while holding the amount of inventory on hand at a
    12·1 answer
  • In a deed, the person or entity conveying the real property interest is more commonly referred to as the:
    12·1 answer
  • Pay the first monthly installment of $2,011 related to the $104,000 long-term note payable borrowed in january 1. Round your int
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!