Answer and Explanation:
The preparation of the income statement is presented below:
Equinox Products Inc.
Income Statement
For the Year Ended December 31, 20Y8
Sales $5,313,000
Less: Cost of goods sold -3,700,000
Gross profit $1,613,000
Less:
Operating expenses:
Selling expenses:
Sales salaries expense $385,000
Sales commissions $185,000
Advertising expense $150,000
Depreciation expense-
store buildings and equipment $100,000
Delivery expense $30,000
Store supplies expense $21,000
Miscellaneous selling expense $14,000
Total -$885,000
Less:
Administrative expenses:
Office salaries expense $170,000
Office rent expense $50,000
Depreciation expense - office buildings and equipment $30,000
Office supplies expense $10,000
Miscellaneous administrative expense $7,500
Total $267,500
Total operating expenses $-1,152,500
Operating income $460,500
Other revenue and expense:
Interest revenue $30,000
Less: Interest expense -$21,000
Income before income tax $469,500
Less: Income tax -$140,500
Net income $329,000
We simply deduct the all expenses and add all revenues so that the net income could come
