PRESTON GIFTS Income Statement Year Ended December 31, 20X1 Cash Collected from Customers Cost of Goods Sold Merchandise Inventory, Jan. 1 Payments to Suppliers Less: Merchandise Inventory, Dec. 31 Cost of Goods Sold Gross Profit on Sales Operating Expenses Automobile Expense Salaries of Employees Payroll Taxes Expense Rent Expense Advertising Expense Utilities Expense Total Expenses Net Loss $ 50,000 90,000 140,000 38,000 69,000 51,200 4,600 13,600 3,100 4,700 $ 140,000 102,000 38,000 146,200 $ (108,200) Additional information provided by owner: All sales were for cash. The beginning and ending merchandise inventories were valued at their estimated selling price. The actual cost of the ending inventory is estimated to be $32,000. The actual cost of the beginning inventory is estimated to be $40,000. On December 31, 20X1, suppliers of merchandise are owed $31,000. On January 1, 20X1, they were owed $24,000. The owner paid her personal monthly car lease of $5,750 per month using business funds and charged this amount to the Automobile Expense account. A check for $1,000 to cover the December rent on the owner's personal apartment was issued from the firm's bank account. This amount was charged to Rent Expense. Using the additional information provided by the owner, prepare an income statement in accordance with generally accepted accounting principles. (Input all amounts as positive values except "Net loss" which should be indicated with a minus sign.)
PRESTON GIFTS Income Statement Year Ended December 31, 20X1 Cash Collected from Customers Cost of Goods Sold Merchandise Inventory, Jan. 1 Payments to Suppliers Less: Merchandise Inventory, Dec. 31 Cost of Goods Sold Gross Profit on Sales Operating Expenses Automobile Expense Salaries of Employees Payroll Taxes Expense Rent Expense Advertising Expense Utilities Expense Total Expenses Net Loss $ 50,000 90,000 140,000 38,000 69,000 51,200 4,600 13,600 3,100 4,700 $ 140,000 102,000 38,000 146,200 $ (108,200) Additional information provided by owner: All sales were for cash. The beginning and ending merchandise inventories were valued at their estimated selling price. The actual cost of the ending inventory is estimated to be $32,000. The actual cost of the beginning inventory is estimated to be $40,000. On December 31, 20X1, suppliers of merchandise are owed $31,000. On January 1, 20X1, they were owed $24,000. The owner paid her personal monthly car lease of $5,750 per month using business funds and charged this amount to the Automobile Expense account. A check for $1,000 to cover the December rent on the owner's personal apartment was issued from the firm's bank account. This amount was charged to Rent Expense. Using the additional information provided by the owner, prepare an income statement in accordance with generally accepted accounting principles. (Input all amounts as positive values except "Net loss" which should be indicated with a minus sign.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:The income statement shown below was prepared and sent by Jenna Preston, the owner of Preston Gifts,
to several of her creditors. The business is a sole proprietorship that sells miscellaneous gifts. An
accountant for one of the creditors looked over the income statement and found that it did not conform to
generally accepted accounting principles.
PRESTON GIFTS
Income Statement
Year Ended December 31,
20X1
Cash Collected from
Customers
Cost of Goods Sold
Merchandise Inventory, Jan. 1
Payments to Suppliers
Less: Merchandise Inventory,
Dec. 31
Cost of Goods Sold
Gross Profit on Sales
Operating Expenses
Automobile Expense
Salaries of Employees
Payroll Taxes Expense
Rent Expense
Advertising Expense
Utilities Expense
Total Expenses
Net Loss
$ 50,000
90,000
140,000
38,000
69,000
51,200
4,600
13,600
3,100
4,700
$ 140,000
102,000
38,000
146,200
$ (108,200)
Additional information provided by owner:
All sales were for cash.
The beginning and ending merchandise inventories were valued at their estimated selling price. The
actual cost of the ending inventory is estimated to be $32,000. The actual cost of the beginning inventory
is estimated to be $40,000.
On December 31, 20X1, suppliers of merchandise are owed $31,000. On January 1, 20X1, they were owed
$24,000.
The owner paid her personal monthly car lease of $5,750 per month using business funds and charged
this amount to the Automobile Expense account.
A check for $1,000 to cover the December rent on the owner's personal apartment was issued from the
firm's bank account. This amount was charged to Rent Expense.
Using the additional information provided by the owner, prepare an income statement in accordance with
generally accepted accounting principles. (Input all amounts as positive values except "Net loss" which
should be indicated with a minus sign.)
Transcribed Image Text:Cost of goods sold
Total merchandise available for sale
Cost of goods sold
Operating expenses
PRESTON GIFTS
Income Statement
Year Ended December 31, 20X1
Total expenses
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