Net income or (Loss) = $43,128.
The provided information states that:
Elegant Decor Company
Forecasted annual income statement
Under the strategy to eliminate Department 200
Sales = $437,000
Cost of goods sold = $261,000
Gross profit = $176,000
Operating expenses
Direct expenses:
Advertising = $15,500
Store supplies utilized = $4,500
Depreciation of Store Equipment = $4,200
Total Direct Expense = $24,200
Allocated Expenses:
Sales Salaries = $64,000
($104,000-2×$24,200+($31,200÷2) = $40,000)
(104,000-$40,000)
Rental Expenses = $14,180
Bad debt expense = $9,400
Office salary = $15,600
($31,200 - ($31,200 ÷ 2))
Insurance expense = $1,724
($2,200 - $476)
Miscellaneous expense = $3,728
($4,000 - $272)
Total Allocated Expenses = $108,632
Total Expense = $132,872
($108,632 + $24,200)
Net income or (Loss) = $43,128
($176,000 - $132,872)
The definitions are accurately paired with their corresponding terms
Explanation:
1. Operating cycle - C. The duration necessary to procure goods or services from suppliers, distribute them to customers, and collect payment from those customers.
2. Accrual basis accounting- B. Record expenses when they are incurred to generate revenue.
3. Retained Earnings = Beginning Retained Earnings + Net Income - Dividends Declared - J. This represents the equation from the income statement.
4. Unearned revenue - F. This asset account captures cash paid in advance of incurred expenses.
5. Revenues - Expenses = Net Income - L. This is known as the retained earnings equation.
6. Expenses - I. Record revenues when received and expenses when they are disbursed.
7. Prepaid Expenses - A. To report the longevity of a business over shorter periods.
8. Gains - E. These are increases in assets or reductions in liabilities resulting from peripheral transactions.
9. None of these are accurate
The solution is available in an excel document.
Helpful details:
Year 4 = $360,000 - $84,000 = $276,000
Preferred share dividend = Total Preferred dividend for that year / total number of preferred shares.
