rachael reys music company uses a perpetual inventory system. the adjus\nrequirement 1. prepare rachael reys…

rachael reys music company uses a perpetual inventory system. the adjus\nrequirement 1. prepare rachael reys music companys multi - step income\nrachael reys music company\nincome statement\nyear ended june 30, 2025\noperating expenses:\nselling expenses $18,900\nadministrative expenses 15,000\ntotal operating expenses 33,900\nother income and expenses:\ninterest expense \ntotal other income and expenses \nnet income (loss) \nadjusted trial balance\ncash $4,200\naccounts receivable 38,000\nmerchandise inventory 17,600\nsupplies 300\nfurniture 39,800\naccumulated depreciation—furniture $8,300\naccounts payable 12,800\nsalaries payable 900\nunearned revenue 6,500\nnotes payable, long - term 16,500\ncommon stock 10,000\nretained earnings 20,800\ndividends 39,000\nsales revenue 181,000\nsales returns and allowances 5,100\nsales discounts 3,800\ncost of goods sold 72,400\nselling expenses 18,900\nadministrative expenses 15,000\ninterest expense 1,900\ntotal $255,800 $255,800

rachael reys music company uses a perpetual inventory system. the adjus\nrequirement 1. prepare rachael reys music companys multi - step income\nrachael reys music company\nincome statement\nyear ended june 30, 2025\noperating expenses:\nselling expenses $18,900\nadministrative expenses 15,000\ntotal operating expenses 33,900\nother income and expenses:\ninterest expense \ntotal other income and expenses \nnet income (loss) \nadjusted trial balance\ncash $4,200\naccounts receivable 38,000\nmerchandise inventory 17,600\nsupplies 300\nfurniture 39,800\naccumulated depreciation—furniture $8,300\naccounts payable 12,800\nsalaries payable 900\nunearned revenue 6,500\nnotes payable, long - term 16,500\ncommon stock 10,000\nretained earnings 20,800\ndividends 39,000\nsales revenue 181,000\nsales returns and allowances 5,100\nsales discounts 3,800\ncost of goods sold 72,400\nselling expenses 18,900\nadministrative expenses 15,000\ninterest expense 1,900\ntotal $255,800 $255,800

Answer

Explanation:

Step1: Calculate gross profit

Gross profit = Net sales - Cost of goods sold. Net sales = Sales revenue - Sales returns and allowances - Sales discounts. Net sales = $181,000 - 5,100 - 3,800=172,100$. Cost of goods sold = $72,400$. Gross profit = $172,100 - 72,400 = 99,700$.

Step2: Calculate income from operations

Income from operations = Gross profit - Total operating expenses. Total operating expenses = Selling expenses+Administrative expenses = $18,900 + 15,000=33,900$. Income from operations = $99,700 - 33,900 = 65,800$.

Step3: Calculate net income

Net income = Income from operations - Interest expense. Interest expense = $1,900$. Net income = $65,800 - 1,900 = 63,900$.

Answer:

Rachael Rey's Music Company
Income Statement Year Ended June 30, 2025
Net Sales ($181,000 - 5,100 - 3,800) $172,100
Cost of Goods Sold $72,400
Gross Profit $99,700
Operating Expenses:
Selling Expenses $18,900
Administrative Expenses $15,000
Total Operating Expenses $33,900
Income from Operations $65,800
Other Income and Expenses:
Interest Expense $1,900
Total Other Income and Expenses $1,900
Net Income $63,900