A part-time bookkeeper prepared this income statement for Kritek Company for the year ending December 31, 2012.
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KRITEK COMPANY
Income Statement
December 31, 2012
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Revenues
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Sales revenue
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$720,000
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Less: Freight-out
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$14,000
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Sales discounts
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11,300
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25,300
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Net sales
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694,700
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Other revenues (net)
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1,300
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Total revenues
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696,000
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Expenses
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Cost of goods sold
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460,000
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Selling expenses
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103,000
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Administrative expenses
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54,000
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Dividends
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12,000
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Total expenses
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629,000
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Net income
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$ 67,000
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As an experienced, knowledgeable accountant, you review the statement and determine the following facts.
1. Sales include $12,000 of deposits from customers for future sales orders.
2. Other revenues contain two items: interest expense $4,000 and interest revenue $5,300.
3. Selling expenses consist of sales salaries and wages $82,500, advertising $13,000, and depreciation on store equipment $7,500.
4. Administrative expenses consist of office salaries $23,000; utilities expense $9,500; rent expense $14,500; and insurance expense $7,000. Insurance expense includes $1,200 of insurance applicable to 2013.
Instructions
Prepare a correct detailed multiple-step income statement. Assume a tax rate of 25%.