Q7. The following selected data are taken from the record of a hypothetical merchandising company; Good Day, at the end of its financial year on December 31, 2020. The Company employs Periodic Inventory method to account for merchandising inventory. You are required to prepare a multiple-step Income statement for the year ended December 31, 2020 in proper format.

Cash $190,000 AD-Equipment $40,000

Accounts Receivable 80,000 Notes Payable 80,000

Inventory, ending 40,000 Accounts Payable 35,000

Prepaid Insurance 48,000 Salaries Payable 15,000

Equipment 98,000 Owners Capital 325,000

Owners Drawing 9,000 Sales Revenue 730,000

Sales Discounts 37,000 Purchase Discounts 20,000

Purchases 460,000 Freight-in 8,000

Freight-out 17,000 Insurance Expense 20,000

Salary Expense 250,000 Miscellaneous Expense 25,000

Inventory, beginning 50,000 Interest expense 15,000

Depreciation Expense 30,000 Tax Expense 11,000

Utility expense 25,000 Rent expense 16,000

Sales Returns & Allow 28,000 Purchase Returns & Allow 25,000

Building 245,000 AD-Building 120,000