Question

Presented below is income statement data for Short & Company as of year-end 2019: Income Tax Expense $5,400 Cost of Goods Sold 14,300 Other Expenses 500 Net Revenue 62,950 Operating Expenses 27,000 Required Prepare a multi-step income statement for 2019. Note: Do not use negative signs with your answers. SHORT & COMPANY Income Statement 2019 Answer Answer Answer Answer Gross Profit on Sales Answer Answer Answer Operating Income Answer Answer Answer Income before Income Taxes Answer Answer Answer Net Income Answer Calculate the company's return on sales ratio. Round the return on sales ratio to one decimal place. If Short's return on sales was 16 percent in 2018, is the company's profitability improving or declining? Return of sales for 2019= Answer and thus, the company's profitability is Answer

Answer 1

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 net income is $15,750

Now the return on sales would equal to

= Net income ÷ net revenue

= $15,750 ÷ $62,950

= 25%

The given return on sales is 16% but the calculation says that the return on sales is 25% which reflects improvement in profitability

The preparation of the income statement is presented in the spreadsheet. Kindly find the attachment below: