Reference no: EM133040722
Question - The information below pertains to the operations of Montreal Retail Corp. for the year ended 31 December:
Cost of merchandise sold $102,000
Inventory warehousing cost 20,000
Accounts payable 120,000
Sales revenue 525,000
Accumulated depreciation 140,000
Sales returns 5,000
Unearned revenue 2,000
Depreciation expense 50,000
Rent revenue 4,000
Employee wages, salaries 100,000
Interest expense 6,000
Investment revenue 3,000
Loss on disposal of geographic segment 30,000
Earnings from discontinued geographic segment 20,000
Distribution expenses 106,000
General and administrative expenses 46,000
Loss on sale of noncurrent assets 13,000
Income tax expense ?
Fire loss 20,000
Additional information:
Functional costs do not include depreciation or employee costs.
Depreciation expense pertains 50% to warehousing cost, 30% to administrative costs, and 20% to distribution expense.
Employee wages, salaries, and benefits pertain 20% to warehousing and merchandising, 50% to administrative costs, and 30% to distribution expense.
The company's is income tax rate is 20%. Assume that the tax rate pertains to all elements of revenue, expense, gain, and loss.
Required -
1. Prepare an income statement on a functional basis, in a single-step format.
2. Prepare an income statement on the basis of nature of expense, using a multiple-step format.