O’Malley Corporation was incorporated and began business on January 1, 2017. It has been successful and now requires a bank loan for additional working capital to finance expansion. The bank has requested an audited income statement for the year 2020. The accountant for O’Malley Corporation provides you with the following income statement which O’Malley plans to submit to the bank. O’Malley CorporationIncome Statement Sales revenue $850,000 Dividends 32,300 Gain on recovery of insurance proceeds from earthquake loss 38,500 920,800 Less: Selling expenses $101,100 Cost of goods sold 510,000 Advertising expense 13,700 Loss on obsolescence of inventories 34,000 Loss on discontinued operations 48,600 Administrative expense 73,400 780,800 Income before income tax 140,000 Income tax 56,000 Net income $ 84,000 Instructions Indicate the deficiencies in the income statement presented above. Assume that the corporation desires a single-step income statement.
O’Malley Corporation was incorporated and began business on January 1, 2017. It has been successful and now requires a bank loan for additional working capital to finance expansion. The bank has requested an audited income statement for the year 2020. The accountant for O’Malley Corporation provides you with the following income statement which O’Malley plans to submit to the bank. O’Malley CorporationIncome Statement Sales revenue $850,000 Dividends 32,300 Gain on recovery of insurance proceeds from earthquake loss 38,500 920,800 Less: Selling expenses $101,100 Cost of goods sold 510,000 Advertising expense 13,700 Loss on obsolescence of inventories 34,000 Loss on discontinued operations 48,600 Administrative expense 73,400 780,800 Income before income tax 140,000 Income tax 56,000 Net income $ 84,000 Instructions Indicate the deficiencies in the income statement presented above. Assume that the corporation desires a single-step income statement.
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 50P
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O’Malley Corporation was incorporated and began business on January 1, 2017. It has been successful and now requires a bank loan for additional
| O’Malley Corporation Income Statement |
||||
| Sales revenue | $850,000 | |||
| Dividends | 32,300 | |||
| Gain on recovery of insurance proceeds from earthquake loss | 38,500 | |||
| 920,800 | ||||
| Less: | ||||
| Selling expenses | $101,100 | |||
| Cost of goods sold | 510,000 | |||
| Advertising expense | 13,700 | |||
| Loss on obsolescence of inventories | 34,000 | |||
| Loss on discontinued operations | 48,600 | |||
| Administrative expense | 73,400 | 780,800 | ||
| Income before income tax | 140,000 | |||
| Income tax | 56,000 | |||
| Net income | $ 84,000 |
Instructions
Indicate the deficiencies in the income statement presented above. Assume that the corporation desires a single-step income statement.
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