P5. Use your knowledge of income statements to fill in the missing items:

SALES - $------
COST OF GOODS SOLD - $575,000
GROSS PROFIT - $1,600,000
GENERAL AND ADMINISTRATIVE EXPENSE - $200,000
SELLING AND MARKETING EXPENSE - $------
DEPRECIATION - $50,000
OPERATING INCOME - $------
INTEREST - $100,000
INCOME BEFORE TAXES - $------
INCOME TAXES (30%) - $------
NET INCOME - $700,000

5. Use your knowledge of income statements to fill in the missing items:

SALES - $------
COST OF GOODS SOLD - $575,000
GROSS PROFIT - $1,600,000
GENERAL AND ADMINISTRATIVE EXPENSE - $200,000
SELLING AND MARKETING EXPENSE - $------
DEPRECIATION - $50,000
OPERATING INCOME - $------
INTEREST - $100,000
INCOME BEFORE TAXES - $------
INCOME TAXES (30%) - $------
NET INCOME - $700,000
An

To fill in the missing items, you can use the information provided and apply the basic structure of an income statement. An income statement typically starts with revenue, subtracts the cost of goods sold to calculate gross profit, deducts operating expenses to calculate operating income, and then accounts for interest and taxes to arrive at net income.

Based on this structure, we can calculate the missing values as follows:

1. Sales: To calculate sales, you need to add the cost of goods sold and gross profit together. From the provided information, we know that the cost of goods sold is $575,000 and the gross profit is $1,600,000. Thus, sales can be calculated as follows:

Sales = Cost of Goods Sold + Gross Profit
= $575,000 + $1,600,000
= $2,175,000

2. Selling and Marketing Expense: To calculate selling and marketing expense, you need to subtract the general and administrative expense from the gross profit. From the provided information, we know that the general and administrative expense is $200,000 and the gross profit is $1,600,000. Thus, selling and marketing expense can be calculated as follows:

Selling and Marketing Expense = Gross Profit - General and Administrative Expense
= $1,600,000 - $200,000
= $1,400,000

3. Operating Income: To calculate operating income, you subtract the selling and marketing expense and depreciation from the gross profit. From the provided information, we know that the selling and marketing expense is $1,400,000 and the depreciation is $50,000. Thus, operating income can be calculated as follows:

Operating Income = Gross Profit - Selling and Marketing Expense - Depreciation
= $1,600,000 - $1,400,000 - $50,000
= $150,000

4. Income Before Taxes: To calculate the income before taxes, you subtract the interest expense from the operating income. From the provided information, we know that the interest expense is $100,000 and the operating income is $150,000. Thus, the income before taxes can be calculated as follows:

Income Before Taxes = Operating Income - Interest Expense
= $150,000 - $100,000
= $50,000

5. Income Taxes: To calculate the income taxes, you need to apply the given tax rate of 30% to the income before taxes. From the provided information, we know that the income before taxes is $50,000 and the tax rate is 30%. Thus, the income taxes can be calculated as follows:

Income Taxes = Income Before Taxes * Tax Rate
= $50,000 * 0.30
= $15,000

Now that we have filled in the missing values, here is the complete income statement:

SALES - $2,175,000
COST OF GOODS SOLD - $575,000
GROSS PROFIT - $1,600,000
GENERAL AND ADMINISTRATIVE EXPENSE - $200,000
SELLING AND MARKETING EXPENSE - $1,400,000
DEPRECIATION - $50,000
OPERATING INCOME - $150,000
INTEREST - $100,000
INCOME BEFORE TAXES - $50,000
INCOME TAXES (30%) - $15,000
NET INCOME - $700,000