COMP$7-1($Algo$)$ Computing and Reporting Net Sales, Cost of Goods Sold, Bad Debt Expense, Accounts

Receivable $($net$),$ and Ending Inventory LO$6-1,$ LO$6-2,$ LO$7-1,$ LO$7-2,$ LO$7-3,$ LO$7-4$

Easley$-$O'Hara Office Equipment sells furniture and technology solutions to consumers and to businesses. Most consumers pay for

their purchases with credit cards and business customers make purchases on open account with terms $(1)/(10),$ net $30.$ Costs of furniture

inventory purchases have generally been rising and costs of computer inventory purchases have generally been declining. The

company's income tax rate is $20$ percent. Casey Easley, the general manager, was particularly interested in the financial statement

effects of the following facts related to first quarter operations.

a$.$ Credit card sales $($discount $2$ percent$)$ were $$35,500.$

b$.$ Sales on account were $$102,000.$ The company expects one$-$half of the accounts to be paid within the discount period.

c$.$ The company computed cost of goods sold for the transactions in $($a$)$ and $($b$)$ above under FIFO and LIFO for its two product lines

and chose the method for each product that minimizes income taxes:

d$.$ During the period, the company wrote off $$1,220$ worth of bad debts.

e$.$ At the end of the period, the company estimated that $1\mathrm{.}5$ percent of gross sales on account would prove to be uncollectible.

f$.$ Costs to deliver furniture to customers were $$5,200.$

g$.$ Rent, utilities, salaries, and other operating expenses were $$22,200.$

h$.$ At the end of the period, the company discovered that the net realizable value of ending inventory was $$1,020$ less than original

cost$.$

Required:

Complete the following table, indicating the effects of each transaction on each income statement line item or subtotal listed. Indicate

the amount and use a minus sign for a decrease; leave the space blank for no effect. $($Hint: Remember that any item that affects

revenues or expenses also affects Income Tax Expense by the amount of the revenue or expense times the income tax rate.$)$ When

you are done, sum across the columns to produce Easley$-$O'Hara's income statement for the quarter.

Note: Deductible amounts should be entered with a minus sign.