Maine Department Store Income Statement

P5-3A

(a) MAINE DEPARTMENT STORE

Income Statement

For the Year Ended December 31, 2008

Sales revenues

Sales $628,000

Less: Sales returns and

??allowances 8,000

Net sales ?620,000

Cost of goods sold 412,700

Gross profit ?207,300

Operating expenses

Selling expenses

Sales salaries expense $76,000

Sales commissions expense ?14,500

Depr. expense—equipment ?13,300

Utilities expense

??($12,000 X 60%) ??7,200

Insurance expense

??($7,200 X 60%) 4,320

Total selling expenses $115,320

Administrative expenses

Office salaries expense ?32,000

Depr. expense—building ?10,400

Property tax expense ??4,800

Utilities expense

??($12,000 X 40%) ??4,800

Insurance expense

??($7,200 X 40%) 2,880

Total administrative

??expenses 54,880

Total operating

??expenses 170,200

Income from operations ??37,100

Other revenues and gains

Interest revenue ???4,000

Other expenses and losses

Interest expense 11,000 7,000

Net income $?30,100

MAINE DEPARTMENT STORE

Retained Earnings Statement

For the Year Ended December 31, 2008

Retained earnings, January 1 $60,000

Add: Net income 30,100

?90,100

Less: Dividends 28,000

Retained earnings, December 31 $62,100

MAINE DEPARTMENT STORE

Balance Sheet

December 31, 2008

Assets

Current assets

Cash $?23,800

Accounts receivable ??50,300

Merchandise inventory ??75,000

Prepaid insurance 2,400

Total current assets $151,500

Property, plant, and equipment

Building $190,000

Less: Accumulated depreciation—

??building 52,500 137,500

Equipment ?110,000

Less: Accumulated depreciation—

??equipment 42,900 67,100 204,600

Total assets $356,100

MAINE DEPARTMENT STORE

Balance Sheet (Continued)

December 31, 2008

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable $?79,300

Mortgage payable due next year ??20,000

Interest payable 8,000

Property taxes payable ???4,800