the information below pertains to the operations of sherbrooke distributors for the year ended 31 december…

the information below pertains to the operations of sherbrooke distributors for the year ended 31 december 20x4:\ncost of merchandise sold\ninventory warehousing cost\naccounts payable\nsales revenue\naccumulated depreciation\nsales returns\nunearned revenue\ndepreciation expense\nrent revenue\nemployee wages, salaries, and benefits\ninterest expense\ninvestment revenue\nloss on disposal of geographic segment\nearnings from discontinued geographic segment\ndistribution expenses\ngeneral and administrative expenses\nloss on sale of noncurrent assets\nincome tax expense\nfire loss\n$116,000\n34,000\n134,000\n665,000\n154,000\n6,400\n3,400\n64,000\n5,400\n114,000\n7,400\n4,400\n44,000\n34,000\n120,000\n60,000\n14,400\n?\n34,000\n\nadditional information:\n - functional costs do not include depreciation or employee costs.\n - depreciation expense pertains 55% to warehousing cost, 25% to administrative costs, and 20% to distribution expense.\n - employee wages, salaries, and benefits pertain 30% to warehousing and merchandising, 45% to administrative costs, and 25% to distribution expense.\n - the companys income tax rate is 30%. assume that the tax rate pertains to all elements of revenue, expense, gain, and loss.\n\nrequired:\n1. prepare an income statement on the basis of nature of expense, using a single - step format.\nnote: loss amounts should be indicated by a minus sign.

the information below pertains to the operations of sherbrooke distributors for the year ended 31 december 20x4:\ncost of merchandise sold\ninventory warehousing cost\naccounts payable\nsales revenue\naccumulated depreciation\nsales returns\nunearned revenue\ndepreciation expense\nrent revenue\nemployee wages, salaries, and benefits\ninterest expense\ninvestment revenue\nloss on disposal of geographic segment\nearnings from discontinued geographic segment\ndistribution expenses\ngeneral and administrative expenses\nloss on sale of noncurrent assets\nincome tax expense\nfire loss\n$116,000\n34,000\n134,000\n665,000\n154,000\n6,400\n3,400\n64,000\n5,400\n114,000\n7,400\n4,400\n44,000\n34,000\n120,000\n60,000\n14,400\n?\n34,000\n\nadditional information:\n - functional costs do not include depreciation or employee costs.\n - depreciation expense pertains 55% to warehousing cost, 25% to administrative costs, and 20% to distribution expense.\n - employee wages, salaries, and benefits pertain 30% to warehousing and merchandising, 45% to administrative costs, and 25% to distribution expense.\n - the companys income tax rate is 30%. assume that the tax rate pertains to all elements of revenue, expense, gain, and loss.\n\nrequired:\n1. prepare an income statement on the basis of nature of expense, using a single - step format.\nnote: loss amounts should be indicated by a minus sign.

Answer

Explanation:

Step1: Calculate net sales

Net sales = Sales revenue - Sales returns Net sales = $665,000 - 154,000=$511,000$

Step2: Calculate total non - operating revenues

Total non - operating revenues = Rent revenue+Investment revenue Total non - operating revenues = $64,000 + 4,400=$68,400$

Step3: Calculate total cost of goods sold and operating expenses

Cost of merchandise sold = $116,000$ Inventory warehousing cost = $34,000$ Depreciation expense for warehousing = $64,000\times0.55=$35,200$ Employee costs for warehousing and merchandising = $114,000\times0.3=$34,200$ Total warehousing and merchandising cost = $34,000 + 35,200+34,200=$103,400$

Depreciation expense for administrative = $64,000\times0.25=$16,000$ Employee costs for administrative = $114,000\times0.45=$51,300$ General and administrative expenses = $60,000$ Total administrative cost = $16,000 + 51,300+60,000=$127,300$

Depreciation expense for distribution = $64,000\times0.2=$12,800$ Employee costs for distribution = $114,000\times0.25=$28,500$ Distribution expenses = $120,000$ Total distribution cost = $12,800+28,500 + 120,000=$161,300$

Total cost of goods sold and operating expenses = $116,000+103,400+127,300+161,300=$508,000$

Step4: Calculate non - operating expenses and losses

Interest expense = $7,400$ Loss on disposal of geographic segment = $44,000$ Loss on sale of non - current assets = $14,400$ Fire loss = $34,000$ Total non - operating expenses and losses = $7,400+44,000+14,400+34,000=$99,800$

Step5: Calculate income before income tax

Income before income tax = Net sales+Total non - operating revenues - Total cost of goods sold and operating expenses - Total non - operating expenses and losses Income before income tax = $511,000+68,400 - 508,000-99,800= - $28,400$

Step6: Calculate income tax expense

Since income before income tax is negative ($-$28,400$), income tax expense = $0$

Step7: Calculate net income (loss)

Net income (loss) = Income before income tax - Income tax expense Net income (loss)=$- 28,400-0=-$28,400$

Income Statement (Single - step format)

Particulars Amount ($)
Revenues:
Net sales 511,000
Rent revenue 64,000
Investment revenue 4,400
Total revenues 579,400
Expenses and losses:
Cost of merchandise sold 116,000
Inventory warehousing cost 34,000
Depreciation expense 64,000
Employee wages, salaries, and benefits 114,000
General and administrative expenses 60,000
Distribution expenses 120,000
Interest expense 7,400
Loss on disposal of geographic segment 44,000
Loss on sale of non - current assets 14,400
Fire loss 34,000
Total expenses and losses 607,800
Income before income tax - 28,400
Income tax expense 0
Net income (loss) - 28,400

Answer:

The income statement in single - step format is shown above with net loss of $-$28,400$.