The ledgers of MidCity Galleries Inc. contain the following balances as of December 31, 2006.Advertising expense ……….. $ 123,000Commission expense on art sales ….. 1,200,000Depreciation expense (administrative) ….. 98,000Dividend revenue ………….. 50,000Insurance expense ………… 600,000Interest expense ………….. 98,000Inventory, January 1 ……….. 1,650,000Inventory, December 31 ……… 1,424,000Loss on the sale of office equipment …… 21,300Miscellaneous administrative expenses ….. 53,200Miscellaneous selling expenses …….. 39,000Net purchases …………. 3,200,000Net sales …………… 9,275,000Rent expense …………… 808,000Freight-in …………….. 232,000Freight-out …………….. 82,500Utilities expense …………. 117,000Wages and salaries ………… 1,264,000Income taxes are calculated at 30 percent of income. The galleries had 90,000 shares of common stock outstanding for the entire year. Total assets amounted to $7,509,000, and common stockholder’s equity was $3,975,400.Instructions(a) Prepare in good form a multiple-step income statement for MidCity Galleries.(b) Calculate three measures of profitability and one ratio of solvency.View Solution:
The ledgers of MidCity Galleries Inc contain the following bala



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