An inexperienced accountant prepared this condensed income statement for Carla Vista Company, a retail firm that has been in business for a number of years. Carla Vista Company Income Statement For the Year Ended December 31, 2025 Revenues Net sales Other revenues Cost of goods sold Gross profit Operating expenses Selling expenses Administrative expenses Net earnings 1. 2. 3. $1,190,000 4. 30,800 1,220,800 777,000 443,800 152,600 As an experienced, knowledgeable accountant, you review the statement and determine that the following steps were taken by the accountant to compute the amounts presented in the income statement. 144,200 296,800 $147,000 Net sales, as presented, consist of sales $1.275,400, less freight-out on merchandise sold $46,200, and sales returns and allowances $39,200. Other revenues, as presented, consist of sales discounts $25,200 and rent revenue $5,600. Selling expenses, as presented, consist of salespersons' salaries $112.000; depreciation on equipment $14,000; advertising $18,200; and sales commissions $8,400. The commissions represent commissions paid. At December 31, $4,200 of commissions have been earned by salespersons but have not been paid. All compensation should be recorded as Salaries and Wages Expense. Administrative expenses, as presented, consist of office salaries $65,800; dividends $25,200, utilities $16,800, interest expense $2,800, and rent expense $33,600, which includes prepayments totaling $8,400 for the first quarter of 2026. Prepare a correct detailed multiple-step income statement. Assume a 25% tax rate. (List other revenues before other expenses)
An inexperienced accountant prepared this condensed income statement for Carla Vista Company, a retail firm that has been in business for a number of years. Carla Vista Company Income Statement For the Year Ended December 31, 2025 Revenues Net sales Other revenues Cost of goods sold Gross profit Operating expenses Selling expenses Administrative expenses Net earnings 1. 2. 3. $1,190,000 4. 30,800 1,220,800 777,000 443,800 152,600 As an experienced, knowledgeable accountant, you review the statement and determine that the following steps were taken by the accountant to compute the amounts presented in the income statement. 144,200 296,800 $147,000 Net sales, as presented, consist of sales $1.275,400, less freight-out on merchandise sold $46,200, and sales returns and allowances $39,200. Other revenues, as presented, consist of sales discounts $25,200 and rent revenue $5,600. Selling expenses, as presented, consist of salespersons' salaries $112.000; depreciation on equipment $14,000; advertising $18,200; and sales commissions $8,400. The commissions represent commissions paid. At December 31, $4,200 of commissions have been earned by salespersons but have not been paid. All compensation should be recorded as Salaries and Wages Expense. Administrative expenses, as presented, consist of office salaries $65,800; dividends $25,200, utilities $16,800, interest expense $2,800, and rent expense $33,600, which includes prepayments totaling $8,400 for the first quarter of 2026. Prepare a correct detailed multiple-step income statement. Assume a 25% tax rate. (List other revenues before other expenses)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:An inexperienced accountant prepared this condensed income statement for Carla Vista Company, a retail firm that has been in
business for a number of years.
Carla Vista Company
Income Statement
For the Year Ended December 31, 2025
Revenues
Net sales
Other revenues
Cost of goods sold
Gross profit
Operating expenses
Selling expenses
Administrative expenses
Net earnings
1.
2.
3.
$1,190,000
4.
30,800
1,220,800
777,000
As an experienced, knowledgeable accountant, you review the statement and determine that the following steps were taken by the
accountant to compute the amounts presented in the income statement.
443,800
152,600
144,200
296,800
$147,000
Net sales, as presented, consist of sales $1,275,400, less freight-out on merchandise sold $46,200, and sales returns and
allowances $39,200.
Other revenues, as presented, consist of sales discounts $25,200 and rent revenue $5,600.
Selling expenses, as presented, consist of salespersons' salaries $112.000, depreciation on equipment $14,000; advertising
$18,200, and sales commissions $8,400. The commissions represent commissions paid. At December 31, $4,200 of
commissions have been earned by salespersons but have not been paid. All compensation should be recorded as Salaries and
Wages Expense.
Administrative expenses, as presented, consist of office salaries $65,800; dividends $25,200, utilities $16,800, interest
expense $2,800, and rent expense $33,600, which includes prepayments totaling $8,400 for the first quarter of 2026.
Prepare a correct detailed multiple-step income statement. Assume a 25% tax rate. (List other revenues before other expenses)
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