Question

Assume that you are the president of Highlight Construction Company. At the end of the first year (December 31, 2014) of operations, the following financial data for the company are available:
Cash $25,700
Receivables from customers (all considered collectible) 11,600
Inventory of merchandise (based on physical count and priced at cost) 76,000
Equipment owned, at cost less used portion 42,100
Accounts payable owed to suppliers 47,240
Salary payable for 2014 (on December 31, 2014, this was owed to an employee who was away because of an emergency; will return around January 10, 2015, at which time the payment will be made) 2,000
Total sales revenue 117,000
Expenses, including the cost of the merchandise sold (excluding income taxes) 86,200
Income taxes expense at 30%
Pretax income; all paid during 2014
Common stock (December 31, 2014) 96,500
Dividends declared and paid during 2014 11,900 (Note: The beginning balances in Common stock and Retained earnings are zero because it is the first year of operations.)


Required:
Prepare a summarized income statement for the year 2014.

Answer 1

Answer:

   The answer is given below;                                                                      

Explanation:

   Highlight Construction Company  

   Summarized Income Statement

   For the year December 31, 2014

                                                                     Amount in $

Sales Revenue                                        117,000

Expenses                                                  (86,200)

Net Income before taxes                          30,800

Income Tax Expense (30,800*30%)          (9,240)

Net Income                                                  21,560

As per requirement of the question, only summarized income statement is prepared.