Service fees 2300000 2100000 General and

Service fees 2300000 2100000 general and

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December31,2014December31,2013Service fees$2,300,000$2,100,000General and administrative expenses1,900,0001,500,000Other income, net40,00020,000Income taxes150,000180,000
171. Read the information about Eagle Corporation.Required::How much is net income for the year ended December 31, 2014? If Eagle Corporation had used a single-stepstatement, by how much would net income be different? Explain.ANSWER: Net Income = $290,000($2,300,000 Service Fees + $40,000 Other Income, net - $1,900,000 General andAdministrative Expenses - $150,000 Income Taxes = $290,000)Net income is the same under a single-step or a multiple-step income statement. Only subtotals and theorder the amounts are listed differ.172. Read the information about Eagle Corporation.Required:Compare the profit margins for 2014 and 2013. Is the company becoming more or less profitable or staying thesame? What could be contributing to this?ANSWER: Profit Margin for 2014 = 12.61%($290,000 Net Income / $2,300,000 Service Fees = 12.61%)Profit Margin for 2013 = 20.95%($440,000 Net Income / $2,100,000 Service Fees = 20.95%)The decrease in profit margin is unfavorable and indicates that the company is becoming less profitable.A significant increase in general and administrative expenses seems to be the cause of the decline.Burke CompanyThe following income statement items are taken from the records of Burke Company for the year ended December31, 2014:Advertising expense$2,600Commission expense3,515Cost of goods sold29,200Depreciation expense - Office Building4,000Income tax expense190Insurance expense sales person’s auto3,350Interest expense1,400Interest revenue2,340Rent revenue7,700Salaries and wages expense - Office13,660Sales Revenue50,300Supplies expense - Office1,990
173. Read the information about Burke Company.Required:Prepare a multiple-step income statement for the year ended December 31, 2014.ANSWER:BURKE COMPANYINCOME STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2014Sales$50,300Cost of goods sold29,200Gross profit$21,100Operating expenses:Selling expenses:Advertising$2,600Commissions3,515Insurance - salesperson's auto3,350Total selling expenses$9,465General and administrative expenses:Depreciation—office building$4,000Salaries and wages—office13,660Supplies—office1,990Total general and administrative expenses19,650Total operating expenses29,115Loss from operations$(8,015)Other revenues and expenses:Interest expense$(1,400)Interest revenue2,340Rent revenue7,700Excess of other revenues over other expenses8,640Income before taxes$625Income tax expense190Net income$435
174. Read the information about Burke CompanyRequired:Prepare a single-step income statement for the year ended December 31, 2014.ANSWER:BURKE COMPANYINCOME STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2014Revenues:Sales$50,300Interest revenue2,340Rent revenue7,700Total Revenues$60,340Expenses:Advertising$2,600Commissions3,515Cost of goods sold29,200Depreciation—office building4,000Income tax expense190Insurance - salesperson's auto3,350Interest expense1,400Salaries and wages—office13,660Supplies—office1,990Total expenses59,905Net income$435175. The 2015 income statement of Cigmar Enterprises shows operating revenues of $120,500, selling expenses of$35,200, general and administrative expenses of $29,900, interest expense of $1,500, and income tax expense of

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