Prepare income statements (Learning Objective 5)

Part One: In 2007, Hannah Summit opened Hannah’s Pets, a small retail shop selling pet supplies. On December 31, 2007, her accounting records show the following:

Requirement Prepare an income statement for Hannah’s Pets, a merchandiser, for the year ended December 31, 2007.
Part Two: Hannah’s Pets succeeded so well that Hannah decided to manufacture her own brand of pet toys—Best Friends Manufacturing. At the end of December 2008, her accounting records show the following:

Requirements 1. Prepare a schedule of cost of goods manufactured for Best Friends Manufacturing for the year ended December 31, 2008.
2. Prepare an income statement for Best Friends Manufacturing for the year ended December 31, 2008.

Part Two: Precious Memories succeeded so well that Shaw decided to manufacture her own special brand of picture frames, to be called Forever Manufacturing. At the end of December 2009, her accounting records show the following:

Requirements 1. Prepare a schedule of cost of goods manufactured for Forever Manufacturing for the year ended December 31, 2009.
2. Prepare an income statement for Forever Manufacturing for the year ended December 31, 2009.
3. How does the format of the income statement for Forever Manufacturing differ from the income statement of Precious Memories?
Part Three: Show the ending inventories that would appear on these balance sheets:
1. Precious Memories at December 31, 2007 2. Forever Manufacturing at December 31, 2009

Transcribed Image Text:

Inventory on December 31, 2007. $10,250 Inventory on January 1, 2007..... 15,000 Sales revenue....... 54,000 Utilities for shop............. 2,450 Rent for shop. 4,000 Sales commissions.... 2,300 Purchases of merchandise........ 27,000