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    Karla Company Income Statement Year Ended December 31, 2008 Note

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    ROCHELLE ANNE VICTORIA
    The income statement of Karla Company for the year ended December 31, 2008 shows net sales of $7.7 million and net income of $1 million. Cost of sales was $5 million. Expenses included $950,000 for selling expenses, $800,000 for administrative expenses, and $100,000 for other expenses. Other income was $400,000.

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    Karla Company Income Statement Year Ended December 31, 2008 Note

    Uploaded by

    ROCHELLE ANNE VICTORIA
    139 views8 pages
    The income statement of Karla Company for the year ended December 31, 2008 shows net sales of $7.7 million and net income of $1 million. Cost of sales was $5 million. Expenses included $950,000 for selling expenses, $800,000 for administrative expenses, and $100,000 for other expenses. Other income was $400,000.

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    COMPREHENSIVE INCOME

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    The income statement of Karla Company for the year ended December 31, 2008 shows net sales of $7.7 million and net income of $1 million. Cost of sales was $5 million. Expenses included $950,000 for selling expenses, $800,000 for administrative expenses, and $100,000 for other expenses. Other income was $400,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    139 views8 pages

    Karla Company Income Statement Year Ended December 31, 2008 Note

    Uploaded by

    ROCHELLE ANNE VICTORIA
    The income statement of Karla Company for the year ended December 31, 2008 shows net sales of $7.7 million and net income of $1 million. Cost of sales was $5 million. Expenses included $950,000 for selling expenses, $800,000 for administrative expenses, and $100,000 for other expenses. Other income was $400,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 8
    At a glance
    Powered by AI
    The document provides income statements and balance sheets for multiple companies using different methods. It also includes statements of cost of goods manufactured.

    The income statement includes net sales revenue, cost of goods sold, other income, expenses and net income. Expenses are broken down into selling, administrative and other expenses.

    The cost of goods sold includes beginning inventory, cost of goods manufactured, and ending inventory. Cost of goods manufactured includes raw materials used, direct labor and factory overhead.

    Karla Company

    Income Statement
    Year ended December 31, 2008

    Note
    Net sales revenue (1) 7,700,000
    Cost of sales (2) (5,000,000)
    Gross income 2,700,000
    Other income (3) 400,000__
    Total income 3,100,000
    Expenses:
    Selling expenses (4) 950,000
    Administrative expenses (5) 800,000
    Other expenses (6) 100,000 1,850,000
    Income before tax 1,250,000
    Income tax ( 250,000)
    Net income 1,000,000

    Note 1 – Net sales revenue

    Gross sales 7,850,000


    Sales returns and allowances ( 140,000)
    Sales discounts ( 10,000)
    Net sales revenue 7,700,000

    Note 2 – Cost of sales

    Inventory, January 1 1,000,000


    Purchases 5,250,000
    Freight in 500,000
    Purchase returns and allowances ( 150,000)
    Purchase discounts ( 100,000)
    Net purchases 5,500,000
    Goods available for sale 6,500,000
    Inventory, December 31 (1,500,000)
    Cost of sales 5,000,000

    Note 3 – Other income

    Rental income 250,000


    Dividend revenue 150,000
    Total other income 400,000
    Note 4 – Selling expenses

    Freight out 175,000


    Salesmen’s commission 650,000
    Depreciation – store equipment 125,000
    Total selling expenses 950,000

    Note 5 – Administrative expenses

    Officers’ salaries 500,000


    Depreciation – office equipment 300,000
    Total administrative expenses 800,000

    Note 6 – Other expenses

    Loss on sale of equipment 50,000


    Loss on sale of investment 50,000
    Total other expenses 100,000

    Natural method
    Karla Company
    Income Statement
    Year ended December 31, 2008
    Note
    Net sales revenue (1) 7,700,000
    Other income (2) 400,000
    Increase in inventory (3) 500,000
    Total 8,600,000
    Expenses:
    Net purchases (4) 5,500,000
    Freight out 175,000
    Salesmen’s commission 650,000
    Depreciation (5) 425,000
    Officers’ salaries 500,000
    Other expenses (6) 100,000 7,350,000
    Income before tax 1,250,000
    Income tax ( 250,000)
    Net income 1,000,000

    Note 1 – Net sales revenue

    Gross sales 7,850,000


    Sales returns and allowances ( 140,000)
    Sales discounts ( 10,000)
    Net sales revenue 7,700,000
    Note 2 – Other income

    Rental income 250,000


    Dividend revenue 150,000
    Total other income 400,000

    Note 3 – Increase in inventory

    Inventory, December 31 1,500,000


    Inventory, January 1 1,000,000
    Increase in inventory 500,000

    Note 4 – Net purchases

    Purchases 5,250,000
    Freight in 500,000
    Purchase returns and allowances ( 150,000)
    Purchase discounts ( 100,000)
    Net purchases 5,500,000

    Note 5 – Depreciation

    Depreciation – store equipment 125,000


    Depreciation – office equipment 300,000
    Total 425,000

    Note 6 – Other expenses

    Loss on sale of equipment 50,000


    Loss on sale of investment 50,000
    Total 100,000

    Problem 3-27
    Masay Company
    Statement of Cost of Goods Manufactured
    Year Ended December 31, 2008

    Raw materials – January 1 200,000


    Purchases 3,000,000
    Raw materials available for use 3,200,000
    Less: Raw materials – December 31 280,000
    Raw materials used 2,920,000
    Direct labor 950,000
    Factory overhead:
    Indirect labor 250,000
    Superintendence 210,000
    Light, heat and power 320,000
    Rent – factory building 120,000
    Repair and maintenance – machinery 50,000
    Factory supplies used 110,000
    Depreciation – machinery 60,000 1,120,000
    Total manufacturing cost 4,990,000
    Goods in process – January 1 240,000
    Total Cost of goods in process 5,230,000
    Less: Goods in process – December 31 170,000
    Cost of goods manufactured 5,060,000
    39
    Cost of sales method
    Masay Company
    Income Statement
    Year ended December 31, 2008
    Note
    Net sales revenue (1) 7,450,000
    Cost of goods sold (2) (5,120,000)
    Gross income 2,330,000
    Other income (3) 210,000
    Total income 2,540,000
    Expenses:
    Selling expenses (4) 830,000
    Administrative expenses (5) 590,000
    Other expense (6) 300,000 1,720,000
    Income before tax 820,000
    Income tax expense ( 320,000)
    Net income 500,000
    Note 1 – Net sales revenue
    Sales 7,500,000
    Sales returns and allowances ( 50,000)
    Net sales revenue 7,450,000
    Note 2 – Cost of goods sold
    Finished goods – January 1 360,000
    Cost of goods manufactured 5,060,000
    Goods available for sale 5,420,000
    Finished goods – December 31 ( 300,000)
    Cost of goods sold 5,120,000
    Note 3 – Other income
    Gain from expropriation 100,000
    Interest income 10,000
    Gain on sale of equipment 100,000
    210,000
    Note 4 – Selling expenses
    Sales salaries 400,000
    Advertising 160,000
    Depreciation – store equipment 70,000
    Delivery expenses 200,000
    Total 830,000
    40
    Note 5 – Administrative expenses
    Office salaries 150,000
    Depreciation – office equipment 40,000
    Accounting and legal fees 150,000
    Office expenses 250,000
    Total 590,000
    Note 6 – Other expense
    Earthquake loss 300,000
    Nature of expense method
    Masay Company
    Income Statement
    Year Ended December 31, 2008
    Note
    Net sales revenue (1) 7,450,000
    Other income (2) 210,000
    Total income 7,660,000
    Expenses:
    Decrease in finished goods
    and goods in process (3) 130,000
    Raw materials used (4) 2,920,000
    Direct labor 950,000
    Factory overhead (5) 1,120,000
    Salaries (6) 550,000
    Advertising 160,000
    Depreciation (7) 110,000
    Delivery expenses 200,000
    Accounting and legal fees 150,000
    Office expenses 250,000
    Other expense (8) 300,000 6,840,000
    Income before tax 820,000
    Income tax expense ( _320,000)
    Net income 500,000
    Note 1 – Net sales revenue
    Sales 7,500,000
    Sales returns and allowances ( 50,000)
    Net sales revenue 7,450,000
    41
    Note 2 – Other income
    Gain from expropriation 100,000
    Interest income 10,000
    Gain on sale of equipment 100,000
    210,000
    Note 3 – Decrease in finished goods and goods in process
    January 1 December 31 Decrease
    Finished goods 360,000 300,000 60,000
    Goods in process 240,000 170,000 70,000
    Total 600,000 470,000 130,000
    Note 4 – Raw materials used
    Raw materials – January 1 200,000
    Purchases 3,000,000
    Raw materials available for use 3,200,000
    Raw materials – December 31 280,000
    Raw materials used 2,920,000
    Note 5 – Factory overhead
    Indirect labor 250,000
    Superintendence 210,000
    Light, heat and power 320,000
    Rent – factory building 120,000
    Repair and maintenance – machinery 50,000
    Factory supplies used 110,000
    Depreciation – machinery 60,000
    Total 1,120,000
    Note 6 – Salaries
    Sales salaries 400,000
    Office salaries 150,000
    Total 550,000
    Note 7 – Depreciation
    Depreciation – store equipment 70,000
    Depreciation – office equipment 40,000
    Total 110,000
    42
    Note 8 – Other expense
    Earthquake loss 300,000

    Berna Company
    Income Statement
    Year Ended December 31, 2008
    Sales (1,000,000/25%) 4,000,000
    Cost of goods sold (45% x 4,000,000) (1,800,000)
    Gross income 2,200,000
    Expenses (30% x 4,000,000) (1,200,000)
    Net income 1,000,000
    Cost of goods sold (150% x 30%) 45%
    Net income (100% - 45% - 30%) 25%
    48
    Computation:
    Purchases (1,500,000/75%) 2,000,000
    Raw materials – December 31 500,000
    Raw materials used (50% x 3,000,000) 1,500,000
    Direct labor (30% x 3,000,000) 900,000
    Factory overhead (20% x 3,000,000) 600,000
    Total manufacturing cost 3,000,000
    Goods in process – December 31 (1/3 x 2,250,000) 750,000
    Cost of goods manufactured 2,250,000
    Finished goods – December 31 (25% x 1,800,000) 450,000
    Cost of goods sold 1,800,000
    Cash receipts:
    Cash investment 1,000,000
    Collections (90% x 4,000,000) 3,600,000 4,600,000
    Cash disbursements:
    Purchases (75% x 2,000,000) 1,500,000
    Direct labor 900,000
    Factory overhead (600,000 – 100,000) 500,000
    Operating expenses 1,200,000 4,100,000
    Cash balance – December 31 500,000
    Berna Company
    Balance Sheet
    December 31, 2008
    ASSETS
    Note
    Current assets:
    Cash 500,000
    Accounts receivable (10% x 4,000,000) 400,000
    Inventories (1) 1,700,000
    Total current assets 2,600,000
    Noncurrent assets:
    Property, plant and equipment (2) 2,900,000
    Total assets 5,500,000
    LIABILITIES AND EQUITY
    Current liability:
    Accounts payable (25% x 2,000,000) 500,000
    Equity:
    Common stock, P100 par 2,500,000
    Additional paid in capital 1,500,000
    Retained earnings 1,000,000
    Total equity 5,000,000
    Total liabilities and equity 5,500,000
    49
    Note 1 – Inventories
    Raw materials – December 31 500,000
    Goods in process – December 31 (1/3 x 2,250,000) 750,000
    Finished goods – December 31 (25% x 1,800,000) 450,000
    Total 1,700,000
    Note 2 – Property, plant and equipment
    Total cost 3,000,000
    Accumulated depreciation ( 100,000)
    Book value 2,900,000

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