Here is my question, please help!!!
5. Assume that Z company's chief financial officer gave you the following information: net
sales, $3,800,000; cost of goods sold, $2,100,000; extraordinary gain (net of income taxes
of of $7,000), $25,000; loss from discontinued operations (net of income tax benefit of
$60,000), $100,000; loss on disposal of discontinued operations (net of income tax benefit
of $26,000), $70,000; selling expenses $100,000; administrative expenses, $80,000; income
taxes expense on continuing operations, $600,000. From this information, prepare the
company's income statement for the year ended December 30,2006.
To prepare the income statement for Z Company for the year ended December 30, 2006, you need to follow the basic format of an income statement which includes revenue, expenses, gains, and losses.
Step 1: Calculate the Gross Profit
Gross Profit = Net Sales - Cost of Goods Sold
Gross Profit = $3,800,000 - $2,100,000
Step 2: Calculate the Operating Income
Operating Income = Gross Profit - Selling Expenses - Administrative Expenses
Operating Income = Gross Profit - $100,000 - $80,000
Step 3: Calculate the Income Before Taxes
Income Before Taxes = Operating Income + Extraordinary Gain - Loss from Discontinued Operations - Loss on Disposal of Discontinued Operations
Income Before Taxes = Operating Income + $25,000 - $100,000 - $70,000
Step 4: Calculate the Net Income
Net Income = Income Before Taxes - Income Taxes Expense on Continuing Operations - Income Tax Benefit from Discontinued Operations
Net Income = Income Before Taxes - $600,000 - $60,000 - $26,000
Now, let's put all the calculated values into the income statement:
Z Company Income Statement for the Year Ended December 30, 2006
Net Sales: $3,800,000
Cost of Goods Sold: $2,100,000
Gross Profit: [calculated in Step 1]
Selling Expenses: $100,000
Administrative Expenses: $80,000
Operating Income: [calculated in Step 2]
Extraordinary Gain: $25,000
Loss from Discontinued Operations: $100,000
Loss on Disposal of Discontinued Operations: $70,000
Income Before Taxes: [calculated in Step 3]
Income Taxes Expense on Continuing Operations: $600,000
Income Tax Benefit from Discontinued Operations: $60,000
Income Tax Benefit from Loss on Disposal of Discontinued Operations: $26,000
Net Income: [calculated in Step 4]
Note: Make sure to replace the [calculated in Step X] placeholders with the actual calculated values from the previous steps.