An inexperienced accountant prepared this condensed income statement for Wright Company, a retail firm that has been in business for a number of years.

WRIGHT COMPANY

Income Statement

For the Year Ended December 31, 2014

Revenues

Net sales ..........$952,000

Other revenues....... 16,000

.............. 968,000

Cost of goods sold..... 548,000

Gross profit.......... 420,000

Operating expenses

Selling expenses ........ 160,000

Administrative expenses... 104,000

............. 264,000

Net earnings.......... $156,000

As an experienced, knowledgeable accountant, you review the statement and determine the following facts.

1. Net sales consist of sales $972,000, less freight-out on merchandise sold $20,000.

2. Other revenues consist of sales discounts $12,000 and interest revenue $4,000.

3. Selling expenses consist of salespersons’ salaries $88,000; depreciation on equipment $4,000; sales returns and allowances $46,000; advertising $12,000; and sales commissions $10,000. All compensation should be recorded as Salaries and Wages Expense.

4. Administrative expenses consist of office salaries $54,000; dividends $14,000; utilities $13,000; interest expense $3,000; and rent expense $20,000, which includes prepayments totaling $2,000 for the first month of 2015. The utilities represent utilities paid. At December 31, utility expense of $3,000 has been incurred but not paid.

Instructions

Prepare a correct detailed multiple-step income statement.