An inexperienced accountant prepared this condensed income statement for Cullumber Company, a retail firm that has been in business for a number of years. Cullumber Company Income Statement For the Year Ended December 31, 2025 Revenues Net sales $1,275,000 Other revenues 33,000 1,308,000 Cost of goods sold 832,500 Gross profit 475,500 Operating expenses Selling expenses 163,500 Administrative expenses 154,500 318,000 Net earnings $157,500 As an experienced, knowledgeable accountant, you review the statement and determine that the following steps were taken by the accountant to compute the amounts presented in the income statement. 1. Net sales, as presented, consist of sales $1,366,500, less freight-out on merchandise sold $49,500, and sales returns and allowances $42,000. 2. 3. Other revenues, as presented, consist of sales discounts $27,000 and rent revenue $6,000. Selling expenses, as presented, consist of salespersons' salaries $120,000; depreciation on equipment $15,000; advertising $19,500; and sales commissions $9,000. The commissions represent commissions paid. At December 31, $4,500 of commissions have been earned by salespersons but have not been paid. All compensation should be recorded as Salaries and Wages Expense. 4. Administrative expenses, as presented, consist of office salaries $70,500; dividends $27,000, utilities $18,000, interest expense $3,000, and rent expense $36,000, which includes prepayments totaling $9,000 for the first quarter of 2026.