Question

PA1.

Answer 1

Answer:

                                Ballentine

Income Statement for the year ended December 31, 2017

                                                                     $

Sales revenue                                       2,700,000

Cost of goods sold                               (1,400,000)

Gross profit                                           1,300,000

Rent on corporate headquarters        (75,000)

Marketing and advertising                  (400,000)

Administrative and selling expenses (425,000)                          

Depreciation                                       (100,000)

Net income                                         300,000

Explanation:

Income statement is prepared by deducting cost of goods sold from sales revenue in order to obtain gross profit. Thereafter, all the expenses will be deducted from the gross profit so as to obtain the net income for the year ended December 31, 2017.