9.1 Provide what is being required of the problem (a and b) Karla Company provided the following information for thecurrent year:5,250,000PurchasesPurchase returns and allowances150,000Rental income250,000Selling expenses:Freight out175,000Salesmen's commission650,000125,000Depreciation-store equipmentMerchandise inventory, January 11,000,0001,500,000Merchandise inventory, December 31Sales7,850,000Sales returns and allowances140,000Sales discounts10,000Administrative expenses:Officers' salaries500,000Depreciation office equipment300,000-Freight in.500,000Income tax250,000Loss on sale of equipment50,000Purchase discounts100,000Dividend revenue150,000Loss on sale of investment50,000Required: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.

Introduction: Expenses in an income statement are categorized in keeping with their nature or…

Answered: a. Prepare an income statement for the…

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 And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter5: Accounting For Retail Businesses

Section: Chapter Questions

Problem 41E: Cost of goods sold and related items The following data were extracted from the accounting records...

See similar textbooks

Related questions

Q: ANSWER IN 20 MINUTES Sunstar Manufacturing Company produces special kitchen utensils using the…

A: The cost of sales is the overall of all prices incurred withinside the manufacturing of an offered…

Q: What are journal entries called that bring the accounts up-to-date at the end of the accounting…

A: Adjusting entries are those which are made at the year end after trail balance is prepared. Purpose…

Q: Company. has been reviewing its total cost over the last few weeks and has established the…

A: The high-low method is used to differentiate the mixed cost. The mixed cost is the combination of…

Q: An equipment cost P67,000 and has a life of 10 years and salvage value of P53,500. Determine its…

A: Depreciation is the allocation of cost of asset over the useful life of the asset. Under double…

Q: CARMINE Company is preparing the interim financial statements for the first quarter ended March 31,…

A: Note: It is given in the question that, advertising expense will be incurred evenly during 2022, so…

Q: The following information pertains to Dallas Company. Assume that all balance sheet amounts…

A: return of shareholder's equity = (net income/ shareholder's equity) * 100 shareholder's equity =…

Q: To help Janette cover her college expense, parents provide Janette with a monthly allowance of $340.…

A: Present value denotes the present worth of money by discounting the future cash flows whereas future…

Q: CARMINE Company is preparing the interim financial statements for the first quarter ended March 31,…

A: Note: It is given in the question that, advertising expense will be incurred evenly during 2022, so…

Q: AUSTERE Co. owns 20% of the ordinary shares of SEVERE, Inc. SEVERE additiona redeemable preference…

A: Explanation of concept Preference Shares are the shares which have been issued with preference right…

Q: Elliptical Consulting Adjusted Trial Balance For the Year Ended June 30, 2019 Account Title…

A: Basic accounting equation is Total assets = Total liabilities + owners equity

Q: Date 2022 March 1 2 3 4 5 6 7 8 9 10 11 12 Transactions The owner, Mrs. Clean, invested the…

A: Closing Entries - Closing entries are required to close the temporary accounts after making…

Q: ter for rupees 50000. He invested rupees 80000 in PPF. One of his existing life insurance policy got…

A: The taxable income of taxpayers is the income liable to tax and it is the income used to determine…

Q: Refer to the previous item, what is the projected ROE under the restricted policy? Use 2 decimal…

A: Return on equity is the return which has been earned by the company and which are available to the…

Q: What kind of assets are relatively long-lived and depreciate over time?

A: Asset is a resource tangible or otherwise on which owner has control and benefits accrue to the…

Q: what are the classification of financial market ? Explain its different components?

A: A financial market is an essential part of the financial system. It is defined as a marketplace for…

Q: FINANCIAL STATEMENT ANALYSIS AND RATIO ANALYSIS The following are the balance sheet and income…

A: If we have to evaluate the vertical analysis of the financial position then we have to use the…

Q: Which of the following obligations below is not included among the lawful obligations of a partner…

A: Meaning of partnership: Partnership is group of two or more persons who agreed to contribute the…

Q: Special Ice Water Ltd is a manufacturer of various products including one that is marketed as Pure-…

A: As per Bartleby guidelines, in case of multiple questions, we are only allowed to answer the first…

Q: As of December 31, 2021, the books of GOV Partnership showed the following balances: G – P400,000; O…

A: For calculation of cash available to partner we need to calculate to Balance sheet before…

Q: Elswick Products, Inc., is a merchandising company that sells binders, paper, and other school…

A: Budgeting - Budgeting is the process of estimating future operations based on past performance. %…

Q: The estimated purchases of raw materials would be

A: Raw materials are those materials which are used directly for the production and manufacturing of…

Q: Required a) Explain, including calculations, how the issue of the bond would be accounted for by…

A: On 1st January 2021 Corgi Ltd. issued bonds of £5 million at par value, the bonds are redeemable on…

Q: (a) Perform the first-stage allocation of costs to the activity cost pools. (b) Compute the activity…

A: Astoms Asbestos Ltd. is in the business of removing potentially toxic asbestos insulation and…

Q: uild in Metro Manila where the plant would cost P2,000,000. Labor would cost annually P120,000 and…

A: The present value factor (PVIF) is a factor used to calculate the present value of money that will…

Q: P1.2. Alice Hospital provides you with the following information that relates to its operating…

A: Statement of operations is a component of the financial statements that shows the net result of…

Q: Question

A: A) For permanent differences such as penalties and interest that are not permitted as reductions for…

Q: FINANCIAL STATEMENT ANALYSIS AND RATIO ANALYSIS The following are the balance sheet and income…

A: An income statement is a financial statement that shows you the company's income and expenditures.…

Q: Capital structure is irrelevant if: I) capital markets are efficient; II) each investor can…

A: Lesson - Since a firm's capital structure decision does not affect investors' cash flow…

Q: What is the net effect of the above errors in the 2021 net income? (If understated, put a negative…

A: The accrued expense are those expenses that are due but the payment of these expenses are not made…

Q: 8. Make an investment analysis for 1998 by computing: a. Equity Ratio b. Creditors Equity to Total…

A: We are given the balance sheet of two years 1997 & 1998 and income statement of 1998 based on…

Q: Information we know about a company Cleaning company Ltd is that the price of their cleaning service…

A: Sales revenue is one of the important factor in the business. This is calculated by multiplying…

Q: Using Microsoft Excel, create an investment cash-flow diagram that will have a present zero using…

A: Present worth of the investment is the value of the investment which has been discounted the cash…

Q: LA Company, which plans to sell 200,000 units of finished product in July, anticipates a growth rate…

A: The production budget is prepared to estimate the number of units to be produced during the period.

Q: National Company reports production costs for 2022 as follows: Direct materials used Direct labor…

A: The period costs are the costs that are expensed in the period they are incurred and these costs are…

Q: Explain the importance of financial statements in any business organization.

A: Answer: Introduction: Financial Statements is the statement which has details of financials and…

Q: The contribution margin is defined as the percent of each sales dollar that remains after satisfying…

A: Lets understand the meaning of contribution margin. Contribution margin is a margin generated from…

Q: Carlo, Ca 50,000 Jan Jun

A: When two or more partenrs come together to do business aims to earn profit is known as partnership.…

Q: Budgeted indirect costs $7,200 Budgeted customer orders 1,200 Budgeted production units 1,800…

A: Budgeted indirect-cost per direct manufacturing labor hour = Budgeted indirect cost/Budgeted Direct…

Q: CERISE Company uses accrual basis of accounting. Wages expense account had a balance of $255,000 at…

A: Wages expenses account is shows current year expenses. And fir calculation of expenses paid during…

Q: What are revenues that have been earned but not recorded in the accounts called? Group of answer…

A: Deferred revenue, also known as unearned revenue, refers to advance payments a company receives for…

Q: TRUE OR FALSE 7.If the financial asset is held for trading or if the financial asset is measured at…

A: For better understanding, we need to know about basic concepts

Q: How is the account Prepaid Insurance classified and on which financial statement should it be…

A: Prepaid insurance is the portion of an insurance premium that has been paid in advance and has not…

Q: Question #4 Arm and Hammer Construction Company, Inc. had these transactions during June through…

A: Introduction: Common stock shows the share in the company's equity position that gives the right to…

Q: How much is the cumulative effect of this change that should be reported in the income statement for…

A: The question is related to Change in Accounting Policy. Accounting Policy are the principles and…

Q: A patient believes that they face two possible states of health in the coming year, poor health with…

A: For this, we need to calculate the probability of Poor health and the expected amount of Expense

Q: S1: When you post an inventory transfer from warehouse 02 to warehouse 01, the system creates an…

A: Inventory Transfers are used to move stock between warehouses. The Inventory Transfer documents…

Q: How mining industries record the assets, liabilities, provisions and foreign exchange transactions…

A: Accounting is the process of recording a company's financial transactions. Summarizing, analysing,…

Q: A company set the total budgeted direct labor cost at P75,000 for the month for producing 5,000…

A: Direct labor efficiency variance = (Actual hours worked × standard rate) - (Standard hours×standard…

Q: Quicksand Company has set the following standards for one unit of product: Direct material…

A: Calculation of Material Quantity variance Material Usage variance = (Standard quantity of material…

Q: How mining industries record the assets, liabilities, provisions and foreign exchange transactions…

A: Accounting is the method of recording a company's financial transactions. Accounting is the process…

Question

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.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Cost of goods sold and related items The following data were extracted from the accounting records of Harkins Company for the year ended April 30, 20Y8: Estimated returns of current year sales 11,600 Inventory, May 1, 20Y7 380,000 Inventory, April 30, 20Y8 415,000 Purchases 3,800,000 Purchases returns and allowances 150,000 Purchases discounts 80,000 Sales 5,850,000 Freight in 16,600 a. Prepare the Cost of goods sold section of the income statement for the year ended April 30, 20Y8, using the periodic inventory system. b. Determine the gross profit to be reported on the income statement for the year ended April 30, 20Y8. c. Would gross profit be different if the perpetual inventory system was used instead of the periodic inventory system?
Steele Corp. purchases equipment for $25,000. Regarding the purchase, Steele recorded the following transactions: Paid shipping of $1,000 Paid installation fees of $2,000 Pays annual maintenance cost of $200 Received a 5% discount on $25,000 sales price Determine the acquisition cost of the equipment.
Steele Corp. purchases equipment for $30,000. Regarding the purchase, Steele paid shipping of $1,200, paid installation fees of $2,750, pays annual maintenance cost of $250, and received a 10% discount on sales price. Determine the acquisition cost of the equipment.
The records of Brenda Corporation at December 31, 2021 showed the following balances: Uncollectible accounts expense 2,000,000, Administrative expenses 10,000,000, Freight out 3,500,000, Finished goods inventory, Jan 1 60,000,000, Cost of sales 40,000,000, Sales commissions 7,000,000, Loss on sale of equipment 1,500,000, Finished goods inventory, Dec 31 55,000,000, Sales 90,000,000 Interest income 4,000,000Based on the information given above, compute for the following1. What is the total operating expenses2. What is the net income or loss
PISCES Company provided the following information for this year: Merchandise purchased for resale P5,500,000; Freight out 40,000; Freight in 70,000; Purchase Returns P80,000 and Interest on inventory loan P 25,000. What amount should be reported as inventoriable cost of the purchase?
Dignity Company had the following consignment transactions during the current year:Inventory shipped on consignment to a consignee 600,000Freight paid by Dignity Company 50,000Inventory received on consignment from a consignor 800,000Freight paid by consignor 50,000 No sales of consigned goods were made during the current year. What amount should be reported as consigned inventory at year-end?
During the fiscal year 20x4, the initial inventory of the goods of company A is 15.000 €, purchases of goods for the fiscal year 25.000,00 € and the final stock of goods 10.000,00 €. The revenue from the sales of goods is 75.000,00 €, the operating expenses 30.000,00 € and the tax rate is 40%. An employee of the accounting department registered as the final stock of goods the amount of 12.000 €. What is the effect on the cost of sales during the use of 20X4?
The following information is related to Dickinson Company for 2020. Retained earnings balance, January 1, 2020 $ 980,000 Sales revenue 25,000,000 Cost of goods sold 16,000,000 Interest revenue 70,000 Selling and administrative expenses 4,700,000 Write-off of goodwill 820,000 Income taxes for 2020 1,244,000 Gain on the sale of investments 110,000 Loss due to flood damage 390,000 Loss on the disposition of the wholesale division (net of tax) 440,000 Loss on operations of the wholesale division (net of tax) 90,000 Dividends declared on common stock 250,000 Dividends declared on preferred stock 80,000 Dickinson Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Dickinson sold the wholesale operations to Rogers Company. During 2020, there were 500,000 shares of common stock outstanding all year. Instructions Prepare a multiple-step income statement…
Problem 1- Pertinent accounts gathered from the record of ABC Corporation for 2020 are as follows:Purchases 5,250,000Purchase returns and allowances 150,000 Rental income 250,000 Freight out 175,000Salesmen's commissions 650,000Depreciation- store equipment 125,000Inventory, January 1 1,000,000Inventory, December 31 1,500,000 Sales 7,850,000Sales returns and allowances 140,000 Sales discounts…
The following information is related to Sheridan Company for 2020. Retained earnings balance, January 1, 2020 $999,600 Sales Revenue 25,500,000 Cost of goods sold 16,320,000 Interest revenue 71,400 Selling and administrative expenses 4,794,000 Write-off of goodwill 836,400 Income taxes for 2020 1,268,880 Gain on the sale of investments 112,200 Loss due to flood damage 397,800 Loss on the disposition of the wholesale division (net of tax) 448,800 Loss on operations of the wholesale division (net of tax) 91,800 Dividends declared on common stock 255,000 Dividends declared on preferred stock 81,600 Sheridan Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Sheridan sold the wholesale operations to Rogers Company. During 2020, there were 500,000 shares of common stock outstanding all year. (a1) Prepare a…
The accounting records of Uniontown Industries, Inc., provided the data below for the year endedDecember 31, 2020:Sales $1,000,000Cost of goods sold 500,000Depreciation expense 15,000Insurance expense 6,000Selling, general and administrative expenses 140,000Interest expense 20,000Income tax expense 125,000Net income 194,000Decrease in inventory 2,000Increase in accounts receivable 1,400Amortization of bond discount 5,000Decrease in prepaid insurance 300Cash dividends paid 20,000Required: In good form, prepare the operating activities section of the statement of cash flows for 2020using the direct method. Show all work for partial credit.
The data shown below were obtained from the financial records of the BST Corporation for the year ended December 31, 2020. Sound Break Corporation Income and Retained Earnings Statement For the year Ended December 31, 2020 Net Sales P1,000,000 Cost of Goods Sold: Inventory, Dec. 31, 2019 P250,000 Purchases 720,000 Total Goods Available P970,000 Inventory 220,000 750,000 Gross Margin on Sales P 250,000 Selling and Administrative (including Depreciation of P20,000)…