Reference no: EM131607951

Scenario: An inexperienced accountant prepared this condensed income statement for Simon Company, a retail firm that has been in business for a number of years.

As an experienced, knowledgeable accountant, you review the statement and determine the following facts:  

1. Net sales consist of: sales $911,000, less freight-out on merchandise sold $33,000, and sales returns and allowances $28,000

2. Other revenues consist of sales discounts $18,000 and rent revenue $4,000.

3. Selling expenses consist of salespersons' salaries $80,000, depreciation on equipment $10,000, advertising $13,000, and sales commissions $6,000.  The commissions represent commissions paid.

At December 21, $3,000 of commissions have been earned by salespersons but have not been paid. 

All compensation should be recorded as Salaries and Wages Expense.

4. Administrative expenses consist of office salaries $47,000, dividends $18,000, utilities $12,000, interest expense $2,000, and rent expense $24,000, which includes prepayments totaling $6,000 the first quarter of 2018. 

Income Statement For the Year Ended December 31, 2017
Revenues
Net sales	$850,000
Other revenues	22,000
	872,000
Cost of goods sold	555,000
Gross profit	317,000
Operating expenses
Selling expenses	109,000
Administrative expenses	103,000
	212,000
Net earnings	$105,000

Instructions       

(a) Prepare a detailed multi-step income statement with a brief explanation of 500 words. Assume a 25% tax rate.         

You can add your analysis below the income statement or attach a separate Word file. 

NOTE:  Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?".

Attachment:- Assignment File.rar