Question 1 Income Statement
Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable
manufacturer and sells them at the retail level. The televisions sell, on average, for $1,500 each. The average
cost of a television from the manufacturer is $900.
Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month
are as follows:
Costs	Cost Formula
Selling:
Advertising	$ 950	per month
Delivery of televisions	40	per television sold
Sales salaries and commissions	2,900	per month, plus 4% of sales
Utilities	400	per month
Depreciation of sales facilities	3,000	per month
Administrative:
Executive salaries	8,000	per month
Depreciation of office equipment	500	per month
Clerical	1,500	per month, plus $40 per television sold
Insurance	400	per month
During April, the company sold and delivered 150 televisions.
Required:
1. Prepare an income statement for April
HOME ENTERTAINMENT
Traditional Income Statement
For the Month Ended April 30
Selling and administrative expenses
Selling expenses
Total selling expenses
Administrative expenses
Total administrative expenses
Total selling and administrative expenses
Operating income