Transfer the attached word document onto the formatted Excel sheet attached. Write a brief explanation of 400 words on the Excel sheet.

Name Section Date Problem 5-5A Simon Company SIMON COMPANY Income Statement For the Year Ended December 31, 2017 289 289 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, 2017 Revenues Net sales $850,000 Other revenues 22,000 872,000 Cost of goods sold 555,000 Gross profit 317,000 Operating expenses Selling expenses 109,000 Administrative expenses 103,000 212,000 Net earnings $105,000 As an experienced, knowledgeable accountant, you review the statement and determine the following facts. 1. Net sales consist of sales $911,000, less freight-out expense on merchandise sold $33,000, and sales returns and allowances $28,000. 2. Other revenues consist of sales discounts $18,000 and rent revenue $8,000. 3. Selling expenses consist of salespersons' salaries $80,000; depreciation on equipment $10,000; advertising $15,000; 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 consist of office salaries $47,000; dividends $18,000; utilities $12,000; interest expense $2,000; and rent expense $24,000, which includes prepayments totaling $6,000 for the first quarter of 2013. Instructions Prepare a correct detailed multiple-step income statement. Assume a 25% tax rate. SOLUTION: SIMON COMPANY Income Statement For the Year Ended December 31, 2012 Sales revenues Sales revenue............................................................. Less: Sales returns and allowances................................................... Sales discounts............................................ Net sales..................................................................... Cost of goods sold................................................................ Gross profit .......................................................................... Operating expenses Salaries and wages expense*......................$136,000 Freight-out.......................................................33,000 Rent expense ($24,000 - $6,000)...................18,000 Advertising expense........................................15,000 Utilities expense..............................................12,000 Depreciation expense.................................. 10,000 Total operating expenses.................................. Income from operations....................................................... Other revenues and gains Rent revenue.............................................................. Other expenses and losses Interest expense.......................................................... Income before income tax.................................................... Income tax expense.............................................................. Net income .......................................................................... *($80,000 + $6,000 + $3,000 + $47,000) $911,000 $28,000 18,000 46,000 865,000 555,000 310,000 224,000 86,000 8,000 (2,000) 6,000 92,000 23,000 $ 69,000