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Karla Company provided the following information for the current year: Purchases 5,250,000 Purchase returns and allowance 150,000 Rental income 250,000 Freight out 175,000 Sales commission 650,000 Depreciation -store equipment 125,000 Inventory, Jan. 1 1,000,000 Inventory, Dec. 31 1,500,000 Sales 7,850,000 Sales returns and allowances 140,000 Sales discounts 10,000 Officers' salaries 500,000 Depreciation -office equipment Freight in 300,000 500,000 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 1. Prepare Income Statement for the year using functional presentation with supporting notes 2. Prepare Income Statement for the year using natural presentation with supporting notes

Karla Company provided the following information for the current year: Purchases 5,250,000 Purchase returns and allowance 150,000 Rental income 250,000 Freight out 175,000 Sales commission 650,000 Depreciation -store equipment 125,000 Inventory, Jan. 1 1,000,000 Inventory, Dec. 31 1,500,000 Sales 7,850,000 Sales returns and allowances 140,000 Sales discounts 10,000 Officers' salaries 500,000 Depreciation -office equipment Freight in 300,000 500,000 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 1. Prepare Income Statement for the year using functional presentation with supporting notes 2. Prepare Income Statement for the year using natural presentation 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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Prepare an income statement using "natural presentation" with supporting notes, used the 2nd picture as a guide and sample.

Net sales Other income Investment inoome 9,000,000 900,000 500,000 Total income 10,400,000 Expenses: Net purchases Increase in inventory Employee benefit cost Sales commission Advertising Supplies expense Delivery expense Depreciation Taxes and licenses. Doubtful accounts Other expenses Finance cost 5,900,000 ( 500,000) 1,400,000 180,000 100,000 120,000 250,000 240,000 20,000 40,000 320,000 200,000 8,270,000 Income before tax Income tax expense 2,130,000 580,000 Net income 1,550,000
Transcribed Image Text:Net sales Other income Investment inoome 9,000,000 900,000 500,000 Total income 10,400,000 Expenses: Net purchases Increase in inventory Employee benefit cost Sales commission Advertising Supplies expense Delivery expense Depreciation Taxes and licenses. Doubtful accounts Other expenses Finance cost 5,900,000 ( 500,000) 1,400,000 180,000 100,000 120,000 250,000 240,000 20,000 40,000 320,000 200,000 8,270,000 Income before tax Income tax expense 2,130,000 580,000 Net income 1,550,000
Karla Company provided the following information for the current year: Purchases 5,250,000 Purchase returns and allowance 150,000 Rental income 250,000 Freight out 175,000 Sales commission 650,000 Depreciation -store equipment 125,000 Inventory, Jan. 1 1,000,000 Inventory, Dec. 31 1,500,000 Sales 7,850,000 Sales returns and allowances 140,000 10,000 500,000 Sales discounts Officers' salaries Depreciation -office equipment Freight in 300,000 500,000 250,000 50,000 Income tax Loss on sale of equipment Purchase discounts 100,000 Dividend revenue 150,000 Loss on sale of investment 50,000 1. Prepare Income Statement for the year using functional presentation with supporting notes 2. Prepare Income Statement for the year using natural presentation with supporting notes
Transcribed Image Text:Karla Company provided the following information for the current year: Purchases 5,250,000 Purchase returns and allowance 150,000 Rental income 250,000 Freight out 175,000 Sales commission 650,000 Depreciation -store equipment 125,000 Inventory, Jan. 1 1,000,000 Inventory, Dec. 31 1,500,000 Sales 7,850,000 Sales returns and allowances 140,000 10,000 500,000 Sales discounts Officers' salaries Depreciation -office equipment Freight in 300,000 500,000 250,000 50,000 Income tax Loss on sale of equipment Purchase discounts 100,000 Dividend revenue 150,000 Loss on sale of investment 50,000 1. Prepare Income Statement for the year using functional presentation with supporting notes 2. Prepare Income Statement for the year using natural presentation with supporting notes
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