Cost of Goods Sold Selling Expenses Administrative Expenses Interest Expenses Other Expenses Income before Taxes Income Tax Expenses Net Income (a) $2,561 $458 (b) $554 $2,046 (c) . (d) Use the following ratio data to complete FS Company's income statement. Inventory turnover is 4 (beginning inventory was $895; ending inventory was $758). • Inventory turnover = cost of goods sold / Average inventory Rate of Return on Sales is 0.15

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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c) Income tax expenses =

- ( ) 276
- ( ) 305
- ( ) 471
- ( ) 533

This question appears to be part of a multiple-choice test, asking students to select the correct value for income tax expenses from the given options.
Transcribed Image Text:c) Income tax expenses = - ( ) 276 - ( ) 305 - ( ) 471 - ( ) 533 This question appears to be part of a multiple-choice test, asking students to select the correct value for income tax expenses from the given options.
**MY Company**

*Income Statement*

*December 31, 2018*

(Amounts in thousands)

| Description                  | Amount   |
|------------------------------|----------|
| Net Sales                    | $10,500  |
| Cost of Goods Sold           | (a)      |
| Selling Expenses             | $2,561   |
| Administrative Expenses      | $458     |
| Interest Expenses            | (b)      |
| Other Expenses               | $554     |
| Income before Taxes          | $2,046   |
| Income Tax Expenses          | (c)      |
| Net Income                   | (d)      |

**Instructions:**

Use the following ratio data to complete FS Company's income statement:

- **Inventory turnover** is 4 (beginning inventory was $895; ending inventory was $758).
  - Inventory turnover = cost of goods sold / average inventory
- **Rate of Return on Sales** is 0.15

**Steps to Complete:**

1. Calculate the average inventory using the formula:
   \[
   \text{Average Inventory} = \frac{\text{Beginning Inventory} + \text{Ending Inventory}}{2}
   \]

2. Use the inventory turnover to determine the Cost of Goods Sold (COGS) with the formula:
   \[
   \text{Inventory Turnover} = \frac{\text{COGS}}{\text{Average Inventory}}
   \]

3. Apply the Rate of Return on Sales to find the Net Income:
   \[
   \text{Net Income} = \text{Net Sales} \times \text{Rate of Return on Sales}
   \]

4. Determine remaining expenses (Interest and Income Tax) by back-calculation from Income before Taxes and Net Income.
Transcribed Image Text:**MY Company** *Income Statement* *December 31, 2018* (Amounts in thousands) | Description | Amount | |------------------------------|----------| | Net Sales | $10,500 | | Cost of Goods Sold | (a) | | Selling Expenses | $2,561 | | Administrative Expenses | $458 | | Interest Expenses | (b) | | Other Expenses | $554 | | Income before Taxes | $2,046 | | Income Tax Expenses | (c) | | Net Income | (d) | **Instructions:** Use the following ratio data to complete FS Company's income statement: - **Inventory turnover** is 4 (beginning inventory was $895; ending inventory was $758). - Inventory turnover = cost of goods sold / average inventory - **Rate of Return on Sales** is 0.15 **Steps to Complete:** 1. Calculate the average inventory using the formula: \[ \text{Average Inventory} = \frac{\text{Beginning Inventory} + \text{Ending Inventory}}{2} \] 2. Use the inventory turnover to determine the Cost of Goods Sold (COGS) with the formula: \[ \text{Inventory Turnover} = \frac{\text{COGS}}{\text{Average Inventory}} \] 3. Apply the Rate of Return on Sales to find the Net Income: \[ \text{Net Income} = \text{Net Sales} \times \text{Rate of Return on Sales} \] 4. Determine remaining expenses (Interest and Income Tax) by back-calculation from Income before Taxes and Net Income.
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