Summary QuestionThe following are selected account balances of Rule Corporation at the end of the

Question


The following are selected account balances of Rule Corporation at the end of

the current year: Debit Credit Operating Expenses $4,000 Sales Revenue

$19,130 Cost of Goods Sold 8,200 Interest Expense 840 Gain on Sale of Land

510 Rule is subject to a 30% income tax rate, and shareholders own 1,500

shares of its capital stock. Required: Prepare the income statement for Rule.

RULE CORPORATION Income Statement For the Year Ended December 31,

Current Year $- Select - - Select - $- Select - - Select - $- Select - Other items: $-

Select - - Select - - Select - $- Select - - Select - $- Select - Earnings per share

$fill in the blank 22




Answer & Explanation


To prepare the income statement for Rule Corporation, we need to calculate the

net income by considering all revenues and expenses, including taxes. Here's a

step-by-step guide:


1. Calculate Gross Profit:

, o Sales Revenue: $19,130


o Cost of Goods Sold (COGS): $8,200


o Gross Profit = Sales Revenue - COGS [ \text{Gross Profit} =

19,130 - 8,200 = 10,930 ]


2. Calculate Operating Income:


o Operating Expenses: $4,000


o Operating Income = Gross Profit - Operating Expenses [ \

text{Operating Income} = 10,930 - 4,000 = 6,930 ]


3. Include Other Items:


o Add any gains and subtract any additional expenses:


o Interest Expense: $840


o Gain on Sale of Land: $510


4. Calculate Total Other Items: [ \text{Total Other Items} = (\text{Gain on

Sale of Land}) + (-\text{Interest Expense}) ] [ = 510 + (-840) = (510) + (-

840) = (510) - (840) =(-330)