Q5TI - Horngren'S Financial And Managerial Accounting

Question

Rocky Corporation’s accounting records include the following items, listed in no particular order, at December 31, 2018:

Other Income and (Expenses) \( (6,000) Cost of Goods Sold \) 29,200

Net Sales Revenue 70,800 Operating Expenses 22,000

Gain on Discontinued Operations 4,800

The income tax rate for Rocky Corporation is 30%. Prepare Rocky’s income statement for the year ended December 31, 2018. 

Omit earnings per share. Use a multi-step format

Step-by-Step Solution

Answer

Net Income for the year ended December 31, 2018, is $12,880

Step 1: Basic Introduction-

Income statement is a financial statement that represents financial position of a corporation in the market. It includes all the revenue and expenses of a corporation to determine the net income or net loss earned or incurred by a corporation.

Step 2: Income Statement-

Income Statement December 31, 2018
Net Sales Revenue	$70,800
Cost of Goods Sold	($29,200)
Gross profit	$41,600
Less: Operating Expenses	($22,000)
Operating Income	$19,600
Other Income and (Expenses)	($6,000)
Income from continuous operations	$13,600
Less: Income tax	($4,080)
Income after Tax	$9,520
Gain on Discontinued Operations	$3,360
Net Income	$12,880