Prepare income statement in good format

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One client indicated that they were interested in purchasing $42,500 worth of products, so the bookkeeper recorded the transaction. However, the client has not actually committed to the purchase.

The bookkeeper already corrected the sales account. However, the bookkeeper may have made a mistake when computing cost of goods sold. She included total production costs for 2014 and did not adjust ending inventory for the $42,500 worth of units left at the end of the year. The amount of ending inventory was determined using a physical count.

Nybrostrand Company 31-Dec-14 Trial Balance (accounts in alphabetical order)

 

Debit

Credit

Accounts payable

 

$ 78,000

Accounts receivable

$ 36,500

 

Cash

30,000

 

Common stock

 

10,000

Depreciation expense

24,350

 

Cost of goods sold

307,000

 

Equipment (net of   depreciation)

415,000

 

Insurance

1,400

 

Inventory

34,000

 

Long-term debt

 

127,000

Marketing

4,500

 

Paid-in capital

 

50,000

Property taxes

16,900

 

Rent

28,000

 

Retained earnings

 

?

Revenues

 

586,000

Salaries

78,500

 

Utilities

6,700

 

 

 

 

Total

982,850

982,850

Prepare income statement in good format.How does the income or loss compare to the original income statement? Explain the importance of the matching concept.

Reference no: EM131772168

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