Acc 403
TUI University
ACC 403
Mod 2 SLP
Statement of Income | | Smith Company | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2012 | | | | | | | | | | Revenues: | | | | | | | | | Net Sales | | | | | | | $406,000.00 | | Other income | | | | | | $0.00 | | | | | | | | | $406,000.00 | Cost and expenses: | | | | | | | | | Cost of goods | | | | | | $289,500.00 | | Salaries | | | | | | | $67,500.00 | | Insurance | | | | | | $1,400.00 | | Utilities | | | | | | | $6,700.00 | | Rent | | | | | | | $18,000.00 | | Property Taxes | | | | | | $8,900.00 | | Marketing | | | | | | $4,500.00 | | Depreciation | | | | | | $24,350.00 | Operating income | | | | | | | ($14,850.00) | Interest | | | | | | | | | | Interest expense | | | | | | $0.00 | | Interest income | | | | | | $0.00 | | Net Interest | | | | | | $0.00 | Income from continuing operation before income taxes | | | ($14,850.00) | Provision for income taxes | | | | | | | | | Current | | | | | | | $0.00 | | | Deferred | | | | | | | $0.00 | | | Total | | | | | | | $0.00 | | Income from continuing operations | | | | | ($14,850.00) | | | | | | | | | | | | Net income | | | | | | | ($14,850.00) | |
In adding the sale of $35,500 worth of computers, it adds to the sales revenue as well as the cost of goods sold.
With a company ordering goods to be manufactured, in this case computers, before paying for them puts a cost of the seller. The cost of goods will rise on the income statement. Since I don’t know the actual cost to the Smith Company to manufacture the computers, the sales price was inserted into the income statement in the cost of goods account. Since the Smith Company has not collected any cash yet the revenue cannot record the
ACC 403
Mod 2 SLP
Statement of Income | | Smith Company | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2012 | | | | | | | | | | Revenues: | | | | | | | | | Net Sales | | | | | | | $406,000.00 | | Other income | | | | | | $0.00 | | | | | | | | | $406,000.00 | Cost and expenses: | | | | | | | | | Cost of goods | | | | | | $289,500.00 | | Salaries | | | | | | | $67,500.00 | | Insurance | | | | | | $1,400.00 | | Utilities | | | | | | | $6,700.00 | | Rent | | | | | | | $18,000.00 | | Property Taxes | | | | | | $8,900.00 | | Marketing | | | | | | $4,500.00 | | Depreciation | | | | | | $24,350.00 | Operating income | | | | | | | ($14,850.00) | Interest | | | | | | | | | | Interest expense | | | | | | $0.00 | | Interest income | | | | | | $0.00 | | Net Interest | | | | | | $0.00 | Income from continuing operation before income taxes | | | ($14,850.00) | Provision for income taxes | | | | | | | | | Current | | | | | | | $0.00 | | | Deferred | | | | | | | $0.00 | | | Total | | | | | | | $0.00 | | Income from continuing operations | | | | | ($14,850.00) | | | | | | | | | | | | Net income | | | | | | | ($14,850.00) | |
In adding the sale of $35,500 worth of computers, it adds to the sales revenue as well as the cost of goods sold.
With a company ordering goods to be manufactured, in this case computers, before paying for them puts a cost of the seller. The cost of goods will rise on the income statement. Since I don’t know the actual cost to the Smith Company to manufacture the computers, the sales price was inserted into the income statement in the cost of goods account. Since the Smith Company has not collected any cash yet the revenue cannot record the
References: Edwards, J., & Hermanson, R. (2007). Accounting Principles: A Business Perspective. First Global Text Edition, Volume 1. Financial Accounting. Retrieved from http://dl.dropbox.com/u/31779972/Accounting%20Principles%20Vol.%201.pdf