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Corporation had net sales of $2,421,500 and interest revenue of $35,400 during 2020. Expenses for 2020 were cost of goods sold $1,465,800, administrative expenses $214,800, selling expenses $295,900, and interest expense $45,000. Windsor’s tax rate is 30%. The corporation had 103,000 shares of common stock authorized and 73,250 shares issued and outstanding during 2020. Prepare a single-step income statement for the year ended December 31, 2020.

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Answer:

Explanation:

In the income statement, the total revenues and the total expenses are recorded.  

If the total revenues are more than the total expenditure then the company earns net income

And, If the total revenues are less than the total expenditure then the company have a net loss

This net income or net loss would reflect in the statement of the retained earning account.  

Before preparing the income statement, first we have to compute the net income or net loss for a given period.

= Net sales + interest revenue - cost of goods sold -  administrative expenses - selling expenses -  interest expense - income tax expense

= $2,421,500 + $35,400 - $1,465,800 -  $214,800 - $295,900 - $45,000 - $130,620

= $304,780

The income tax expense = (Net sales + interest revenue - cost of goods sold -  administrative expenses - selling expenses -  interest expense) × income tax rate

= ($2,421,500 + $35,400 - $1,465,800 -  $214,800 - $295,900 - $45,000) × 30%

= $130,620

The preparation of the income statement is presented in the spreadsheet. Kindly find the attachment below:

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