An inexperienced accountant prepared this condensed income statement for Ivanhoe Company, a retail firm that has been in business for a number of years. Ivanhoe Company Income Statement For the Year Ended December 31, 2025 Revenues Your answer is partially correct. Net sales Other revenues Cost of goods sold Gross profit Operating expenses Selling expenses Administrative expenses Net earnings 1. 2. 3. 4. $1,105,000 28,600 1,133,600 721,500 412,100 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. Sales 141,700 133,900 275,600 $136,500 Net sales, as presented, consist of sales $1,184,300, less freight-out on merchandise sold $42,900, and sales returns and allowances $36,400. Other revenues, as presented, consist of sales discounts $23,400 and rent revenue $5,200. Selling expenses, as presented, consist of salespersons' salaries $104,000; depreciation on equipment $13,000; advertising $16,900; and sales commissions $7,800. The commissions represent commissions paid. At December 31, $3,900 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 $61,100; dividends $23,400, utilities $15,600, interest expense $2,600, and rent expense $31,200, which includes prepayments totaling $7,800 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.) IVANHOE COMPANY Income Statement For the Year Ended December 31, 2025
An inexperienced accountant prepared this condensed income statement for Ivanhoe Company, a retail firm that has been in business for a number of years. Ivanhoe Company Income Statement For the Year Ended December 31, 2025 Revenues Your answer is partially correct. Net sales Other revenues Cost of goods sold Gross profit Operating expenses Selling expenses Administrative expenses Net earnings 1. 2. 3. 4. $1,105,000 28,600 1,133,600 721,500 412,100 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. Sales 141,700 133,900 275,600 $136,500 Net sales, as presented, consist of sales $1,184,300, less freight-out on merchandise sold $42,900, and sales returns and allowances $36,400. Other revenues, as presented, consist of sales discounts $23,400 and rent revenue $5,200. Selling expenses, as presented, consist of salespersons' salaries $104,000; depreciation on equipment $13,000; advertising $16,900; and sales commissions $7,800. The commissions represent commissions paid. At December 31, $3,900 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 $61,100; dividends $23,400, utilities $15,600, interest expense $2,600, and rent expense $31,200, which includes prepayments totaling $7,800 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.) IVANHOE COMPANY Income Statement For the Year Ended December 31, 2025
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 2E: Cost of Goods Sold and Income Statement Schuch Company presents you with the following account...
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Transcribed Image Text:An inexperienced accountant prepared this condensed income statement for Ivanhoe Company, a retail firm that has been in business
for a number of years.
Ivanhoe Company
Income Statement
For the Year Ended December 31, 2025
Revenues
Your answer is partially correct.
Net sales
Other revenues
Cost of goods sold
Gross profit
Operating expenses
Selling expenses
Administrative expenses
Net earnings
1.
2.
3.
4.
$1,105,000
28,600
1,133,600
721,500
Sales
412,100
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.
141,700
133,900
275,600
$136,500
Net sales, as presented, consist of sales $1,184,300, less freight-out on merchandise sold $42,900, and sales returns and
allowances $36,400.
Other revenues, as presented, consist of sales discounts $23,400 and rent revenue $5,200.
Selling expenses, as presented, consist of salespersons' salaries $104,000; depreciation on equipment $13,000; advertising
$16,900; and sales commissions $7,800. The commissions represent commissions paid. At December 31, $3,900 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 $61,100; dividends $23,400, utilities $15,600, interest
expense $2,600, and rent expense $31,200, which includes prepayments totaling $7,800 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.)
IVANHOE COMPANY
Income Statement
For the Year Ended December 31, 2025
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