Problem 5-5A

An inexperienced accountant prepared this condensed income statement for Wildhorse Co., a retail firm that has been in business for a number of years.

WILDHORSE CO. Income Statement For the Year Ended December 31, 2017
Revenues
Net sales		$1,224,000
Other revenues		31,680
		1,255,680
Cost of goods sold		799,200
Gross profit		456,480
Operating expenses
Selling expenses		156,960
Administrative expenses		148,320
		305,280
Net earnings		$151,200

As an experienced, knowledgeable accountant, you review the statement and determine the following facts.

1.		Net sales consist of sales $1,311,840, less freight-out on merchandise sold $47,520, and sales returns and allowances $40,320.
2.		Other revenues consist of sales discounts $25,920 and rent revenue $5,760.
3.		Selling expenses consist of salespersons salaries $115,200; depreciation on equipment $14,400; advertising $18,720; and sales commissions $8,640. The commissions represent commissions paid. At December 31, $4,320 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 consist of office salaries $67,680; dividends $25,920; utilities $17,280; interest expense $2,880; and rent expense $34,560, which includes prepayments totaling $8,640 for the first quarter of 2018.

Prepare a correct detailed multiple-step income statement. Assume a 25% tax rate. (List other revenues before other expenses. Round answers to 0 decimal places, e.g. 5,125.)

WILDHORSE CO. Income Statement