Analysis of Income Items—Multiple Step Income Statement Preparation
On December 31, 2008, analysis of Sayer Sporting Goods’ operations for 2008 revealed the following.
(a) Total cash collections from customers, $105,260.
(b) December 31, 2007, inventory balance, $12,180.
(c) Total cash payments, $92,450.
(d) Accounts receivable, December 31, 2007, $22,150.
(e) Accounts payable, December 31, 2007, $10,830.
(f) Accounts receivable, December 31, 2008, $18,920.
(g) Accounts payable, December 31, 2008, $7,120.
(h) General and administrative expenses total 25% of sales. This amount includes the depreciation on store and equipment.
(i) Selling expenses of $12,352 total 20% of gross profit.
(j) No general and administrative or selling expense liabilities existed at December 31,
2008.
(k) Wages and salaries payable at December 31, 2007, $4,450.
(l) Depreciation expense on store and equipment total 12% of general and administrative expenses.
(m) Shares of stock issued and outstanding, 5,000.
(n) The income tax rate is 40%.
Instructions:
Prepare a multiple step income statement for the year ended December 31, 2008.