Prepare Kayceys income statement for the year ended December 31, 2012 from the i
ID: 3408436 • Letter: P
Question
Prepare Kayceys income statement for the year ended December 31, 2012 from the information provided below. Only use line items pertaining to an income statement.
Research & Development Expenses $50.000
Loss from discontinued operations 16.000
Extraordinarygain from lawsuit settlement. Net of tax expense $12.000 $55.000
Selling general and administrative expenses $ 28,000
Gross Profit 150,000
Net Sales 500,000
Provision for income taxes 32,000
Interest Expense 35,000
Net cash provided by Operations 75,000
Accounts Recievable 40,000
Explanation / Answer
The desired income statement for the year ended December 31, 2012 is as under :
1. Net sales - 500000
2. Non operating Income ( settlement of lawsuit, net of tax) - 55000
3. Sub total ( 1 + 2) - 555000
4. Expenses
i. Selling, General & Administrative Expenses - 28000
ii.Research & Development Expenses - 50000
iii.Interest Expenses - 35000
iv. Provision for income tax - 32000
v. Loss from discontinued operations - 16000
5. Total Expenses ( i to v above) - 161000
6. Gross Profit ( 3 -5) - 394000
However, since the gross profit ( it is presumed that this gross profit is after tax) has been stated to be 150000, there has to a missing entry which is likely to be pertaining to stock adjustment. The opening stocks - closing stocks is likely to be 394000 - 150000 = 244000 if there are no other missing entries.. -