"An inexperience 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 revenues16,000

968,000

Cost of goods sold548,000

Gross profit420,000

Operating expenses

Selling expenses160,000

Administrative expenses104,000

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.

I need help preparing an income statement - please see attached document. (I have most of it started, but I feel like I have errors in in and where/how does one calculate the Income tax expense?)

Question: P5-5BAn 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 Other revenues Cost of goods sold Gross profit Operating expenses Selling expenses Administrative expenses Net earnings $952,000 16,000 968,000 548,000 420,000 160,000 104,000 264,000 $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. I get this far... and I feel that I am on the right track, but I can't determine what the income tax expense is. WRIGHT COMPANY Income Statement For the Month Ended December 31, 2014 Sales Revenues Sales revenue Less: Sales returns and allowances Sales discounts 1,030,000 46,000 12,000 Net Sales 972,000 Cost of goods sold 548,000 Gross profit 424,000 Operating Expenses Salaries and wages expense Depreciation expense 152,000 4,000 Freight-out 20,000 Advertising expense 12,000 Rent expense 18,000 Utilities expense 16,000 Interest expense 3,000 Total operating expenses 225,000 Income from operations 199,000 Other revenues and gains Interest revenue 4,000 Other expenses and losses Interest expense Income before income taxes Income tax expense Net Income 3,000 1,000 200,000