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1. Is the company's net income the amount stated by the owner? 2. Is the company a good investment? Why or why not?

1. Is the company's net income the amount stated by the owner? 2. Is the company a good investment? Why or why not?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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  1. Is the company’s net income the amount stated by the owner?
  2. Is the company a good investment? Why or why not? Cite at least two reasons for your answer.
11:05 < Chapter 6 Multiple Step Income Stmt.do... Chapter 6 -Multiple Step Income Statement A friend mentions he has a new company, Swedish Designs, and is looking for investors. He just started business this September and tells you that the company has already made $36,700 in just the first month of business. He encourages you to invest before all the stock in the company is gone. The next day you call the company's accountant to obtain the financial information. You are provided with the following information. You decide to prepare a multiple-step income statement with the data. Sales revenue Sales returns & allowances Sales discounts COGS Interest revenue Interest expense $706,000 Salaries & wages expense* 109,500 15,000 28,000 8,500 50,900 2,100 Dashboard 15,000 Rent expense* 4,000 Depreciation expense* 540,000 Utilities expense* 8,000 Gain on sale of land 6,100 Loss from employee strike *Expenses are 60% selling and 40% administrative After preparing the multiple-step income statement answer the following questions: 1. Is the company's net income the amount stated by the owner? 2. Is the company a good investment? Why or why not? 000 000 Calendar To Do Notifications 271 Inbox
Transcribed Image Text:11:05 < Chapter 6 Multiple Step Income Stmt.do... Chapter 6 -Multiple Step Income Statement A friend mentions he has a new company, Swedish Designs, and is looking for investors. He just started business this September and tells you that the company has already made $36,700 in just the first month of business. He encourages you to invest before all the stock in the company is gone. The next day you call the company's accountant to obtain the financial information. You are provided with the following information. You decide to prepare a multiple-step income statement with the data. Sales revenue Sales returns & allowances Sales discounts COGS Interest revenue Interest expense $706,000 Salaries & wages expense* 109,500 15,000 28,000 8,500 50,900 2,100 Dashboard 15,000 Rent expense* 4,000 Depreciation expense* 540,000 Utilities expense* 8,000 Gain on sale of land 6,100 Loss from employee strike *Expenses are 60% selling and 40% administrative After preparing the multiple-step income statement answer the following questions: 1. Is the company's net income the amount stated by the owner? 2. Is the company a good investment? Why or why not? 000 000 Calendar To Do Notifications 271 Inbox
11:05 Chapter 6 Multiple Step Income Stmt_s... Sheet2 Sheet1 Sales revenues Less: Sales returnes & allowances Sales discounts Swedish Designs Income Statement For the Month Ended September 30, 20XX Net sales Cost of goods sold Gross profit Operating expenses Selling Salaries & wages expense Depreciation expense Rent expense Utilities expense Total selling expenses General and administrative Salaries & wages expense Depreciation expense Rent expense Utilities expense Total general and administrative exp. Total operating expenses Income/(Loss) from operations Other revenue/(expenses) Gain on sale of land Interest revenue Interest expense Loss from employee strike Net income Dashboard 000 000 Calendar To Do 15,000 4,000 65,700 16,800 9,000 5,100 43,800 11,200 6,000 3,400 50,900 8,000 -6,100 -2,100 Notifications 706,000 19,000 687,000 540,000 147,000 96,600 64,400 161,000 -14,000 50,700 36,700 271 Inbox
Transcribed Image Text:11:05 Chapter 6 Multiple Step Income Stmt_s... Sheet2 Sheet1 Sales revenues Less: Sales returnes & allowances Sales discounts Swedish Designs Income Statement For the Month Ended September 30, 20XX Net sales Cost of goods sold Gross profit Operating expenses Selling Salaries & wages expense Depreciation expense Rent expense Utilities expense Total selling expenses General and administrative Salaries & wages expense Depreciation expense Rent expense Utilities expense Total general and administrative exp. Total operating expenses Income/(Loss) from operations Other revenue/(expenses) Gain on sale of land Interest revenue Interest expense Loss from employee strike Net income Dashboard 000 000 Calendar To Do 15,000 4,000 65,700 16,800 9,000 5,100 43,800 11,200 6,000 3,400 50,900 8,000 -6,100 -2,100 Notifications 706,000 19,000 687,000 540,000 147,000 96,600 64,400 161,000 -14,000 50,700 36,700 271 Inbox
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