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a. Prepare an income statement for the year using the "functional" method with supporting notes. b. Prepare an income statement for the year using the "natural" method with supporting notes.

a. Prepare an income statement for the year using the "functional" method with supporting notes. b. Prepare an income statement for the year using the "natural" method with supporting notes.

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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9.1 Provide what is being required of the problem (a and b)

Karla Company provided the following information for the current year: 5,250,000 Purchases Purchase returns and allowances 150,000 Rental income 250,000 Selling expenses: Freight out 175,000 Salesmen's commission 650,000 125,000 Depreciation-store equipment Merchandise inventory, January 1 1,000,000 1,500,000 Merchandise inventory, December 31 Sales 7,850,000 Sales returns and allowances 140,000 Sales discounts 10,000 Administrative expenses: Officers' salaries 500,000 Depreciation office equipment 300,000 - Freight in. 500,000 Income tax 250,000 Loss on sale of equipment 50,000 Purchase discounts 100,000 Dividend revenue 150,000 Loss on sale of investment 50,000 Required: a. Prepare an income statement for the year using the "functional" method with supporting notes. b. Prepare an income statement for the year using the "natural" method with supporting notes.
Transcribed Image Text:Karla Company provided the following information for the current year: 5,250,000 Purchases Purchase returns and allowances 150,000 Rental income 250,000 Selling expenses: Freight out 175,000 Salesmen's commission 650,000 125,000 Depreciation-store equipment Merchandise inventory, January 1 1,000,000 1,500,000 Merchandise inventory, December 31 Sales 7,850,000 Sales returns and allowances 140,000 Sales discounts 10,000 Administrative expenses: Officers' salaries 500,000 Depreciation office equipment 300,000 - Freight in. 500,000 Income tax 250,000 Loss on sale of equipment 50,000 Purchase discounts 100,000 Dividend revenue 150,000 Loss on sale of investment 50,000 Required: a. Prepare an income statement for the year using the "functional" method with supporting notes. b. Prepare an income statement for the year using the "natural" method with supporting notes.
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