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4-2 Endless Company

The income statement of Endless Company for the year ended December 31, 2020 shows net sales of $8.6 million and net income of $1 million. Gross income was $3.65 million. Expenses including distribution costs of $1.26 million and administrative expenses of $1.14 million resulted in income before tax of $1.28 million. The statement of retained earnings shows retained earnings at the beginning of the year were $350,000 after a prior period adjustment, and ended at $900,000 after net income of $1 million and dividends paid of $450,000.

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4K views3 pages

4-2 Endless Company

The income statement of Endless Company for the year ended December 31, 2020 shows net sales of $8.6 million and net income of $1 million. Gross income was $3.65 million. Expenses including distribution costs of $1.26 million and administrative expenses of $1.14 million resulted in income before tax of $1.28 million. The statement of retained earnings shows retained earnings at the beginning of the year were $350,000 after a prior period adjustment, and ended at $900,000 after net income of $1 million and dividends paid of $450,000.

Uploaded by

yayaya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Endless Company

Income Statement
Year ended December 31, 2020

Net Sales 1 8,600,000


Cost of goods sold 2 4,950,000
Gross income 3,650,000
Other income 3 80,000
Total income 3,730,000
Expenses
Distribution costs 4 1,260,000
Administrative expenses 5 1,140,000
Other expenses 6 50,000 2,450,000
Income before tax 1,280,000
Income tax expense 280,000
Net income 1,000,000

Note 1 Net sales revenue


Sales 8,750,000
Sales returns and allowances 150,000
8,600,000

Note 2 Cost of goods sold


Merchandise inventory, beginning 1,100,000
Purchases 4,600,000
Freight in 145,000
Purchase R&A 45,000 4,700,000
Goods available for sale 5,800,000
Merchandise inventory, ending 1,000,000
Cost of goods sold before writedown 4,800,000
Loss from inventory writedown 150,000
Cost of goods sold after writedown 4,950,000

Note 3 Other income


Dividend revenue 50,000
Gain on sale of equipment 10,000
Interest revenue 20,000
80,000

Note 4 Distribution cost


Delivery expenses 425,000
Depreciation - delivery truck 60,000
Depreciation - store equipment 25,000
Sales salaries 600,000
Store supplies 150,000
1,260,000
Note 5 Administrative expenses
Contribution 125,000
Depreciation - office 35,000
Doubtful accounts 30,000
Office salaries 950,000
1,140,000

Note 5 Other expenses


Loss on sale of trading securities 50,000
Endless Company
Statement of Retained Earnings
Year ended December 31, 2020

Retained earnings, January 1 550,000


Prior period error - under depreciation on 2019 200,000
Corrected beginning balance 350,000
Net income 1,000,000
Total 1,350,000
Dividends paid 450,000
Retained earnings, Decembaer 31 900,000

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