4E - Intermediate Accounting (Kieso)

Question

The financial records of LeRoi Jones Inc. were destroyed by fire at the end of 2017. Fortunately, the controller had kept certain statistical data related to the income statement as follows.XXX 

1. The beginning merchandise inventory was \(92,000 and decreased 20% during the current year.
2.  Sales discounts amount to \)17,000.
3.  20,000 shares of common stock were outstanding for the entire year.
4.  Interest expense was \(20,000.
5.  The income tax rate is 30%.
6.  The cost of goods sold amounts to \)500,000.
7.  Administrative expenses are 20% of the cost of goods sold but only 8% of gross sales.
8.  Four-fifths of the operating expenses relate to sales activities.

Instructions

From the foregoing information prepare an income statement for the year 2017 in single-step form.

Step-by-Step Solution

Answer

The Net income of LeRoi Jones Inc. is $149,100.

Meaning of Financial Statements

Financial Statements refer to the recording of all the business transactions. Balance sheet, Statement of Stockholder's equity, Income statement, and Cash flow statement are the primary financial statements.

Preparation of Single-Step Income Statement

LeRoi Jones Inc.
Income Statement
For the Year Ended December 31, 2017
Particulars	Amount ($)	Amount($)
Sales	$1,250,000
Less: Sales Discount	$17,000
Net Sales		$1,233,000
Less: Expenses
Cost of Goods Sold	$500,000
Administrative Expenses	$100,000
Selling Expenses	$400,000
Interest Expenses	$20,000
Total Expenses		$1,020,000
Income before Taxes		$213,000
Income Taxes @30%		$63,900
Net Income		$149,100
Earnings per Share		$7.46