Question

4. Reconstruct the following Income Statement. Exercise: Income Statement MY Company Income Statement December 31, 2018 (amounts in thousands) 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 S (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) 826.5 * Inventory turnover = Cost of goods sold / Average inventory Rate of return on sales is 0.15 a) $3,300

Answer 1

Inventory Turnover ratio = Beginning Inventory $ 895 Ending Inventory $ 758 Average Inventory = (Beginning Inventory + Ending Inventory)/2 = ($895 + $758)/2 = $ 826.50 (a) Cost of Goods Sold= Inventory Turnover ratio x Average Inventory = 4 x $826.50 = $ 3,306.00 Total Expenses before tax = Net sales - Income before taxes $10500 - $2046 $8,454.00 (b) Interest Expenses Total Expenses - (Cost of Goods sold+Selling exp + Admin exp + Other exp) $8454 - ($3306 + $2561 + $458 + $554) $8454 - $6879 $1,575.00 (d) Net Income Net Sales x Rate of Return on Sales $10500 x 0.15 $1,575.00 (c) Income Tax expense Income before taxes - Net Income $2046 - $1575 $ 471.00 Final Answers: (a) Cost of Goods Sold (b) Interest expense (c) Income Tax expense (d) Net Income $ 3,306.00 $1,575.00 $ 471.00 $1,575.00

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