Alex didn't study very hard when he took accounting because he thought he wouldn't ever use it
Question:
Alex didn't study very hard when he took accounting because he thought he wouldn't ever use it on the job at Valentine Company. Yesterday, after preparing all end-of-the-month adjusting entries, both of the company's accounting staff became ill. The company owner, knowing that Alex had taken accounting as part of his college major, asked him to finish the job by preparing the financial statements. The owner needs the statements tomorrow to present to her banker. Alex isn't sure that his income statement is prepared properly.
Valentine Company
Income Statement
at September 30, 2004
Sales revenue ...........$48,500
Wages expense ......... 11,369
Operating income .......... 37,131
Operating expenses:
Advertising ............. 3,133
Cost of goods sold ........ 30,070
Insurance ................. 670
Interest expense .......... 240
Utilities .............. 1,250
Gross profit ............ 1,768
Depreciation expense ....... 282
Pretax income ........... 1,486
Income tax expense ........ 519
Net income ............ $ 967
Alex is confident that each revenue account and expense account balance is correct because those were determined by the accounting staff. He is unsure, however, that he has organized them properly on the income statement. Therefore, he is unsure about the summary amounts listed in bold-faced print on the statement. Rearrange the accounts into proper income statement format. Be sure to date the statement correctly.
Step by Step Answer:
Financial Accounting Information For Decisions
ISBN: 978-0324672701
6th Edition
Authors: Robert w Ingram, Thomas L Albright