Answer:
Pina Colada Corp.
Multi-step Income Statement for the year ended December 31, 2017:
Sales revenue $2,304,000
Sales returns and allowances 39,360
Net Sales 2,264,640
Cost of goods sold 1,041,600
Gross profit 1,223,040
Rent revenue 23,040
Gross operating revenue 1,246,080
Depreciation expense 120,000
Salaries and wages expense 648,000
Freight-out 24,000
Advertising expense 52,800
Sales discounts 8,160
Insurance expense 14,400
Total operating expenses 867,360
Operating income (EBIT) $378,720
Interest revenue 28,800
Interest expense (67,200)
Income before taxes $340,320
Income tax expense 67,200
Net income $273,120
Retained earnings 513,600
Dividends (144,000)
Retained earnings, Dec. 31, 2017 $642,720
Explanation:
a) Data and Calculations:
December 31, 2017:
Common stock 240,000
Retained earnings 513,600
Inventory 64,320
Sales revenue 2,304,000
Sales returns and allowances 39,360
Rent revenue 23,040
Interest revenue 28,800
Cost of goods sold 1,041,600
Depreciation expense 120,000
Salaries and wages expense 648,000
Freight-out 24,000
Advertising expense 52,800
Sales discounts 8,160
Insurance expense 14,400
Interest expense 67,200
Income tax expense 67,200
Dividends 144,000
