View the step-by-step solution to:

P7-5A part (a,b) The ledgers of Mid City Galleries Inc. contain the following balances as of December 31, 2008.



P7-5A part (a,b)


The ledgers of Mid City Galleries Inc. contain the following balances as of December 31, 2008.
Advertising expense $123,000
Commissions expense on art sales 1,200,000
Depreciation expense (administrative) 98,000
Dividend revenue 50,000
Insurance expense 600,000
Interest expense 98,000
Inventory, January1 1,650,000
Inventory, December 31 1,424,000
Loss on the sale of office equipment 21,300
Miscellaneous administrative expenses 53,200
Miscellaneous selling expenses 39,000
Net purchases 3,200,000
Net sales 9,275,000
Rent expense 808,000
Freight-in 232,000
Freight-out 82,500
Utilities expense 117,000
Wages and salaries 1,264,000


Income taxes are calculated at 30 percent of income. The galleries had 90,000 shares of common stock outstanding for the entire year. Total assets amounted to $7,509,000, and common stockholder's equity was $3,975,400.







Complete in good form the multiple-step income statement for Mid City Galleries. (List expenses form largest to smallest e.g. 10, 5, 3, 2. Round earnings per share to 2 decimal places, e.g. 10.50 and all other answers to 0 decimal places, e.g. 125. Enter all amounts as positive amounts and subtract where necessary.)

MID CITY GALLERIES, INC.

Income Statement
For the Year Ended December 31, 2008December 31, 2008

Assets
Beginning inventoryUtilities expenseMiscellaneous administrative expensesNet salesDividend revenueWages and salariesIncome tax expenseCommissions expenseLoss of sale of office equipmentAdvertising expenseInterest expenseEarnings per shareRent expenseEnding inventoryNet purchasesFreight-inMiscellaneous selling expensesFreight-outInsurance expenseDepreciation expense $
Cost of goods sold
Utilities expenseWages and salariesMiscellaneous selling expensesInterest expenseDepreciation expenseCommissions expenseAdvertising expenseIncome tax expenseFreight-inEnding inventoryFreight-outEarnings per shareInsurance expenseRent expenseDividend revenueBeginning inventoryLoss of sale of office equipmentNet salesMiscellaneous administrative expensesNet purchases $
Wages and salariesDividend revenueLoss of sale of office equipmentFreight-inDepreciation expenseInterest expenseMiscellaneous administrative expensesRent expenseIncome tax expenseEnding inventoryEarnings per shareCommissions expenseMiscellaneous selling expensesFreight-outBeginning inventoryNet purchasesInsurance expenseNet salesAdvertising expenseUtilities expense $
Miscellaneous selling expensesLoss of sale of office equipmentAdvertising expenseNet purchasesIncome tax expenseEarnings per shareMiscellaneous administrative expensesWages and salariesInsurance expenseFreight-inFreight-outUtilities expenseDividend revenueEnding inventoryCommissions expenseNet salesDepreciation expenseRent expenseInterest expenseBeginning inventory


Goods available for sale
Interest expenseLoss of sale of office equipmentEnding inventoryFreight-inCommissions expenseIncome tax expenseEarnings per shareNet purchasesNet salesFreight-outBeginning inventoryWages and salariesAdvertising expenseMiscellaneous selling expensesDividend revenueInsurance expenseDepreciation expenseRent expenseUtilities expenseMiscellaneous administrative expenses

Cost of goods sold

Gross profit
Operating expenses
Selling expenses
Utilities expenseBeginning inventoryEarnings per shareMiscellaneous administrative expensesRent expenseFreight-inLoss of sale of office equipmentWages and salariesDividend revenueInterest expenseCommissions expenseIncome tax expenseNet salesNet purchasesEnding inventoryFreight-outAdvertising expenseMiscellaneous selling expensesInsurance expenseDepreciation expense
Depreciation expenseInsurance expenseNet salesEarnings per shareFreight-inFreight-outAdvertising expenseEnding inventoryMiscellaneous administrative expensesWages and salariesMiscellaneous selling expensesRent expenseUtilities expenseNet purchasesBeginning inventoryDividend revenueLoss of sale of office equipmentInterest expenseIncome tax expenseCommissions expense

Dividend revenueAdvertising expenseFreight-outMiscellaneous selling expensesLoss of sale of office equipmentFreight-inDepreciation expenseBeginning inventoryRent expenseNet purchasesInsurance expenseInterest expenseUtilities expenseIncome tax expenseEarnings per shareMiscellaneous administrative expensesNet salesWages and salariesEnding inventoryCommissions expense
Insurance expenseMiscellaneous administrative expensesDividend revenueDepreciation expenseUtilities expenseLoss of sale of office equipmentFreight-inIncome tax expenseRent expenseBeginning inventoryNet purchasesNet salesEnding inventoryEarnings per shareWages and salariesCommissions expenseInterest expenseAdvertising expenseMiscellaneous selling expensesFreight-out



Administrative expenses
Commissions expenseMiscellaneous administrative expensesDividend revenueEarnings per shareBeginning inventoryAdvertising expenseNet purchasesWages and salariesNet salesUtilities expenseFreight-inEnding inventoryInterest expenseFreight-outMiscellaneous selling expensesLoss of sale of office equipmentInsurance expenseDepreciation expenseRent expenseIncome tax expense
Depreciation expenseFreight-inUtilities expenseIncome tax expenseMiscellaneous selling expensesRent expenseMiscellaneous administrative expensesInsurance expenseInterest expenseWages and salariesBeginning inventoryDividend revenueLoss of sale of office equipmentAdvertising expenseCommissions expenseNet salesEarnings per shareNet purchasesEnding inventoryFreight-out
Ending inventoryInterest expenseIncome tax expenseInsurance expenseMiscellaneous administrative expensesNet salesAdvertising expenseWages and salariesEarnings per shareMiscellaneous selling expensesCommissions expenseFreight-inFreight-outDepreciation expenseRent expenseBeginning inventoryUtilities expenseDividend revenueNet purchasesLoss of sale of office equipment
Dividend revenueDepreciation expenseEnding inventoryInsurance expenseLoss of sale of office equipmentInterest expenseCommissions expenseWages and salariesUtilities expenseMiscellaneous selling expensesNet purchasesIncome tax expenseNet salesFreight-outBeginning inventoryEarnings per shareAdvertising expenseFreight-inRent expenseMiscellaneous administrative expenses
Income tax expenseInterest expenseNet purchasesWages and salariesEnding inventoryAdvertising expenseEarnings per shareDividend revenueFreight-outDepreciation expenseFreight-inNet salesBeginning inventoryRent expenseMiscellaneous selling expensesCommissions expenseUtilities expenseInsurance expenseMiscellaneous administrative expensesLoss of sale of office equipment

Commissions expenseDepreciation expenseFreight-outUtilities expenseAdvertising expenseNet purchasesLoss of sale of office equipmentEnding inventoryIncome tax expenseWages and salariesMiscellaneous selling expensesEarnings per shareMiscellaneous administrative expensesInsurance expenseNet salesRent expenseInterest expenseDividend revenueBeginning inventoryFreight-in


Total operating expenses

Income from operations


Other revenue and gains
Beginning inventoryInterest expenseNet salesNet purchasesIncome tax expenseLoss of sale of office equipmentDepreciation expenseUtilities expenseInsurance expenseFreight-inMiscellaneous selling expensesCommissions expenseWages and salariesEarnings per shareEnding inventoryFreight-outRent expenseMiscellaneous administrative expensesAdvertising expenseDividend revenue
Other expenses and losses
Commissions expenseNet purchasesFreight-outRent expenseLoss of sale of office equipmentUtilities expenseMiscellaneous administrative expensesFreight-inBeginning inventoryWages and salariesNet salesAdvertising expenseEnding inventoryDividend revenueMiscellaneous selling expensesIncome tax expenseEarnings per shareInsurance expenseDepreciation expenseInterest expense


Dividend revenueUtilities expenseEnding inventoryFreight-outMiscellaneous administrative expensesFreight-inEarnings per shareLoss of sale of office equipmentNet purchasesAdvertising expenseIncome tax expenseNet salesInterest expenseWages and salariesBeginning inventoryCommissions expenseMiscellaneous selling expensesInsurance expenseDepreciation expenseRent expense

()

Income before income taxes
Net purchasesFreight-inDividend revenueIncome tax expenseNet salesWages and salariesBeginning inventoryMiscellaneous selling expensesRent expenseEnding inventoryAdvertising expenseMiscellaneous administrative expensesLoss of sale of office equipmentCommissions expenseFreight-outInsurance expenseDepreciation expenseInterest expenseUtilities expenseEarnings per share

Net income $


Beginning inventoryMiscellaneous administrative expensesNet purchasesLoss of sale of office equipmentMiscellaneous selling expensesFreight-inEnding inventoryCommissions expenseWages and salariesFreight-outNet salesAdvertising expenseInsurance expenseDividend revenueDepreciation expenseInterest expenseRent expenseUtilities expenseIncome tax expenseEarnings per share $








Calculate three measures of profitability and one ratio of solvency. (Round answer to 2 decimal places, e.g. 10.50.)

Return on sales %
Return on assets %
Return on stockholders' equity %
Debt to total assets %






P7-5A part (a,b) The ledgers of Mid City Galleries Inc. contain the following balances as of December 31, 2008. Advertising expense Commissions expense on art sales Depreciation expense (administrative) Dividend revenue Insurance expense Interest expense Inventory, January1 Inventory, December 31 Loss on the sale of office equipment Miscellaneous administrative expenses Miscellaneous selling expenses Net purchases Net sales Rent expense Freight-in Freight-out Utilities expense Wages and salaries Income taxes are calculated at 30 percent of income. The galleries had 90,000 shares of common stock ou year. Total assets amounted to $7,509,000, and common stockholder's equity was $3,975,400. Complete in good form the multiple-step income statement for Mid City Galleries. 10, 5, 3, 2. Round earnings per share to 2 decimal places, e.g. 10.50 and all other answers to 0 decimal all amounts as positive amounts and subtract where necessary.)
Background image of page 1
MID CITY GALLERIES, INC. Income Statement Assets Cost of goods sold Goods available for sale Cost of goods sold Gross profit Operating expenses Selling expenses Administrative expenses Total operating expenses Income from operations Other revenue and gains Other expenses and losses
Background image of page 2
Show entire document
Sign up to view the entire interaction

Top Answer

We can only answer your free 3 questions one at a time. You have two options to get your questions answered:... View the full answer

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online