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Practice Problem

The income statement for X Mo Merchandising shows a net income of $127,840 for 2022, down from $176,040 in 2021, despite an increase in sales. The balance sheet indicates total assets of $520,000 and total liabilities of $261,000 as of December 31, 2022, reflecting a stable financial position. Operating expenses rose significantly, contributing to the decrease in net income compared to the previous year.

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20 views1 page

Practice Problem

The income statement for X Mo Merchandising shows a net income of $127,840 for 2022, down from $176,040 in 2021, despite an increase in sales. The balance sheet indicates total assets of $520,000 and total liabilities of $261,000 as of December 31, 2022, reflecting a stable financial position. Operating expenses rose significantly, contributing to the decrease in net income compared to the previous year.

Uploaded by

s2301505
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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X Mo Merchandising X Mo Merchandising

Income Statement Income Statement


For the year ended December 31, 2022 For the year ended December 31, 2022
2022 2021 2022 2021
Sales 800,000 700,000 Sales 800,000 700,000
Cost of Goods Sold Cost of Goods Sold
Merchandise Inventory, Beg. 30,500 25,000 Merchandise Inventory, Beg. 30,500 25,000
Purchases 700,000 450,000 Purchases 700,000 450,000
Total Goods Available for Sale 730,500 475,000 Total Goods Available for Sale 730,500 475,000
Merchandise Inventory, End. 41,000 30,500 Merchandise Inventory, End. 41,000 30,500
Cost of Goods Sold 689,500 444,500 Cost of Goods Sold 689,500 444,500
Gross Profit 310,500 310,500 Gross Profit 310,500 310,500
Operating Expenses 120,000 75,000 Operating Expenses 120,000 75,000
Earnings before Interest and Tax 190,500 235,500 Earnings before Interest and Tax 190,500 235,500
Interest Expense 2,500 2,500 Interest Expense 2,500 2,500
Earnings before Tax 188,000 233,000 Earnings before Tax 188,000 233,000
Income Tax Expense 60,160 56,960 Income Tax Expense 60,160 56,960
Net Income 127,840 176,040 Net Income 127,840 176,040

X Mo Merchandising X Mo Merchandising
Balance Sheet Balance Sheet
December 31, 2022 December 31, 2022

Assets Assets
2022 2021 2022 2021
Cash 35,000 65,000 Cash 35,000 65,000
Marketable Securities 42,000 30,000 Marketable Securities 42,000 30,000
Accounts Receivable 45,000 50,000 Accounts Receivable 45,000 50,000
Merchandise Inventory 41,000 30,500 Merchandise Inventory 41,000 30,500
Prepared Expenses 7,000 5,000 Prepared Expenses 7,000 5,000
Total Current Assets 170,000 180,500 Total Current Assets 170,000 180,500
Property, plant and equipment 350,000 320,000 Property, plant and equipment 350,000 320,000
Total Assets 520,000 500,500 Total Assets 520,000 500,500

Liabilities and Owner's Equity Liabilities and Owner's Equity


Accounts Payable 36,000 28,000 Accounts Payable 36,000 28,000
Salaries Payable 30,000 16,000 Salaries Payable 30,000 16,000
Utilities Payable 15,000 7,000 Utilities Payable 15,000 7,000
Taxes Payable 30,000 30,000 Taxes Payable 30,000 30,000
Total Current Liabilities 111,000 81,000 Total Current Liabilities 111,000 81,000
Notes Payable (due 2022) 150,000 200,000 Notes Payable (due 2022) 150,000 200,000
Total Liabilities 261,000 281,000 Total Liabilities 261,000 281,000
Owner, Capital 259,000 219,500 Owner, Capital 259,000 219,500
Total Liabilities and Total Liabilities and
Owner's Equity 520,000 500,500 Owner's Equity 520,000 500,500

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