Robin Mackey is a business major at Southern Missouri University. Robin is struggling with an accounting homework assignment to prepare an income statement for Wambaugh Inc., an imaginary firm. Robin has decided that the following items should be included in this income statement.
(a) Cost of Goods Sold
(b) Income Taxes Payable
(c) Accounts Receivable
(d) Income Tax Expense
(e) Earnings per Share
(f) Loss from Discontinued Operations (net of taxes)
(g) Net Sales
(h) Possible Loss from Lawsuit
(i) Accounts Payable
(j) Dividends (declared by the Board of Directors)
(k) Gain on Sale of Equipment
(l) Salaries Payable
(m) Selling and Administrative Expenses
(n) Stock Dividends Distributable
Required:
Help Robin complete her homework assignment. Which of the items listed should be included in Wambaugh Inc.’s income statement? In what order should these items appear in the income statement? Where will the remaining items appear in the financial statements? Will any of the amounts not be included in the actual financial statements? If so, explain.