Name: Louise Justin S.

Tabanao Subject and Code: ACC124 - 8716

Functional income statement

Karla Company
Income Statement
Year ended on December 31, 2015

Note
Net sales (1) 7,700,000
Cost of goods sold (2) (5,000,000)

Gross income 2,700,000

Other income (3) 400,000

Total income 3,100,000

Expenses:
Selling expenses (4) 950,000
Administrative expenses (5) 800,000
Other expenses (6) 100,000 (1,850,000)

Income before tax 1,250,000

Income tax expense (250,000)

Net income 1,000,000

Note 1 – Net sales

Gross sales 7,850,000

Sales returns and allowances (140,000)
Sales discounts (10,000)

Net sales 7,700,000

Note 2 – Cost of goods sold

Merchandise inventory, Jan 1. 1,000,000

Purchases 5,250,000
Freight in 500,000
Total 5,750,000
Purchase returns and allowance (150,000)
Purchase discount (100,000) 5,500,000
Goods available for sale 6,500,000
Merchandise inventory, Dec. 31 (1,500,000)

Cost of Goods Sold 5,000,000

Notes 3 – Other income

Rental income 250,000

Dividend revenue 150,000

Total 400,000

Notes 4 – Selling expenses

Freight out 175,000

Salesman’s commission 650,000
Depreciation – store equipment 125,000

Total 950,000
Notes 5 – Administrative Expenses

Officers’ salaries 500,000

Depreciation – office equipment 300,000

Total 800,000

Notes 6 – Other expenses

Loss on sale of equipment 50,000

Loss on sale of investment 50,000

Total 100,000
Natural income statement

Karla Company
Income Statement
Year ended on December 31, 2015

Note
Net sales (1) 7,700,000
Other income (2) 400,000

Total income 8,100,000

Expenses:
Increase in inventory (3) (500,000)
Net purchases (4) 5,500,00
Salesman’s commission 650,000
Officers’ salaries 500,000
Freight out 175,000
Depreciation (5) 425,000
Other expenses (6) 100,000 (6,850,000)

Income before tax 1,250,000

Income tax expense (250,000)

Net income 1,000,000

Note 1 – Net sales

Gross sales 7,850,000

Sales returns and allowances (140,000)
Sales discounts (10,000)

Net sales 7,700,000

Note 2- Other income

Rental income 250,000

Dividend revenue 150,000

Total 400,000

Note 3 – Increase in inventory

Merchandise inventory, Dec. 31 1,500,00

Merchandise inventory, Jan. 1 1,000,000

Increase in inventory 500,000

Note 4 – Net purchases

Purchases 5,250,000
Freight in 500,000
Purchase return and allowance (150,000)
Purchase discount (100,000)

Net purchases 5,500,000

Note 5 – Depreciation

Depreciation – store equipment 125,000

Depreciation – office equipment 300,000

Total 425,000

Note 6 – Other expenses

Loss on sale of equipment 50,000

Loss on sale of investment 50,000

Total 100,000