Question

Suppose the following information was taken from the 2022 financial statements of pharmaceutical giant Merck and Co. (All dollar amounts are in millions.) Retained earnings, January 1, 2022 $46,600.0 Cost of goods sold 8,900.0 Selling and administrative expenses 8,100.0 Dividends 4,000.0 Sales revenue 35,800.0 Research and development expense 5,500.0 Income tax expense 2,300.0 After analyzing the data, prepare an income statement for the year ending December 31, 2022.

Answer 1

Answer and Explanation:

The preparation of the income statement is presented below:

Revenue:  

Sales  $35,800

Less: Expenses:  

Cost of Goods Sold -$8,900

Selling & Adm. Exp. -$8,100  

Research & Dev. Exp. -$5,500  

Income Tax -$2,300  

Net Income $11,000

We simply deduct all the expenses from the revenue so that the net income could arrive