Dave Brandon, the accountant for Street Incorporated, was asked to make a presentation to the board of directors concerning the corporation's year-end financial position. While flying to the meeting on Saturday morning, Brandon checked the papers in his briefcase and realized he had left the income statement on his desk back at the office. Since he knew there would not be enough time for anyone to get to the office and fax or e-mail him a copy of the statement, he examined the rest of the material in his briefcase to see what information was available.
A review of the statement of retained earnings revealed that net income after income taxes for the year was $108,000. From some notes he had made for the presentation, he knew that the corporation's gross profit on sales was 40 percent and net income as a percentage of net sales was 8 percent. The income tax rate for the corporation is 28 percent. Brandon also remembered that the selling and administrative expenses were the same amount. With this information, he was able to reconstruct the income statement for the corporation before the plane reached its destination.
INSTRUCTIONS
Using the same information given above, prepare an income statement for Street Incorporated for the current year. To get started, first list the major headings for a condensed income statement. Then, starting with the net income figure, work to fill in the dollar amounts based on the percentage relationships given.