A part-time bookkeeper prepared this income statement for Kritek Company for the year ending December 31, 2012.
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KRITEK COMPANY |
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Revenues |
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Sales revenue |
$720,000 |
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Less: Freight-out |
$14,000 |
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Sales discounts |
11,300 |
25,300 |
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Net sales |
694,700 |
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Other revenues (net) |
1,300 |
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Total revenues |
696,000 |
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Expenses |
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Cost of goods sold |
460,000 |
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Selling expenses |
103,000 |
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Administrative expenses |
54,000 |
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Dividends |
12,000 |
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Total expenses |
629,000 |
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Net income |
$ 67,000 |
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As an experienced, knowledgeable accountant, you review the statement and determine the following facts.
1. Sales include $12,000 of deposits from customers for future sales orders.
2. Other revenues contain two items: interest expense $4,000 and interest revenue $5,300.
3. Selling expenses consist of sales salaries and wages $82,500, advertising $13,000, and depreciation on store equipment $7,500.
4. Administrative expenses consist of office salaries $23,000; utilities expense $9,500; rent expense $14,500; and insurance expense $7,000. Insurance expense includes $1,200 of insurance applicable to 2013.
Instructions
Prepare a correct detailed multiple-step income statement. Assume a tax rate of 25%.