P5.5 (LO 4), AP An inexperienced accountant prepared this condensed income statement for Simon Company, a retail firm that has been in business for a number of years. Simon Company Income Statement For the Year Ended December 31, 2025 Revenues Net sales Other revenues Cost of goods sold Gross profit Operating expenses Selling expenses Administrative expenses Net earnings $850,000 22,000 872,000 555,000 317,000 109,000 103,000 212,000 $105,000 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 $911,000, less freight-out on merchandise sold $33,000, and sales returns and allowances $28,000. 2. Other revenues, as presented, consist of sales discounts $18,000 and rent revenue $4,000. prepayments 3. Selling expenses, as presented, consist of salespersons' salaries $80,000, depreciation on equipment $10,000, advertising $13,000, and sales commissions $6,000. The commissions represent commissions paid. At December 31, $3,000 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 $47,000, dividends $18,000, utilities $12,000, interest expense $2,000, and rent expense $24,000, which includes totaling $6,000 for the first quarter of 2026. Instructions Evaluate the steps taken by the inexperienced accountant so you can identify corrections that need to be made. Then, prepare a correct detailed multiple-step income statement. (Assume a 25% tax rate.) Journalize, post, and prepare adjusted trial balance and financial statement. Net income $67,500