E1-7 Preparing an Income Statement [LO 1-2]Home Realty, Incorporated, has been operating for three years and is owned by three i
nvestors. J. Doe owns 60 percent of the total outstanding stock of 9,000 shares and is the managing executive in charge. On December 31, the following financial items for the entire year were determined: sales revenue, $221,000; salaries and wages expense, $108,000; interest expense, $7,400; advertising expenses, $9,575; and income tax expense, $19,600. Also during the year, the company declared and paid the owners dividends amounting to $14,000.Prepare the company’s income statement.
1 answer:
Answer:
Explanation:
In the income statement, the total revenues and the total expenses are recorded.
If the total revenues are more than the total expenditure then the company earns net income
And, If the total revenues are less than the total expenditure then the company have a net loss
This net income or net loss would reflect in the statement of the retained earning account.
The preparation of the income statement is presented in the spreadsheet. Kindly find the attachment below:
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Answer:
(1)
(2) The variable cost per unit produced is $7.60.
(3) The coefficient of determination is 0.96 or 96%.
(4) The estimated total cost is $5,046.67.
Explanation:
A regression analysis for the provided data is performed on Microsoft Excel.
The output is attached below.
(1)
The estimated regression equation that could be used to predict the total cost for a given production volume is:
(2)
The variable cost per unit produced is given by the slope of the line.
The slope of a regression line represent the value of the dependent variable for one unit of the independent variable.
So, the variable cost per unit produced is $7.60.
(3)
Consider the regression output attached.
The coefficient of determination is 0.96 or 96%.
This implies that the percentage of the variation in total cost that can be explained by production volume is 96%.
(4)
For Volume = 500 units predict the total cost as follows:
Thus, the estimated total cost is $5,046.67.
