In April, Holderness Inc, a merchandising company, had sales of $221,000, selling expenses of $14,000, and administrative expenses of $25,000. The cost of merchandise purchased during the month was $155,000. The beginning balance in the merchandise inventory account was $34,000 and the ending balance was $48,000.Required:Prepare a traditional format income statement for April.
What will be an ideal response?
| Traditional Format Income Statement | ||
| Sales | ? | $221,000 |
| Cost of goods sold* | ? | 141,000 |
| Gross margin | ? | 80,000 |
| Selling and administrative expenses: | ? | ? |
| Selling expenses | $14,000 | ? |
| Administrative expenses | 25,000 | 39,000 |
| Net operating income | ? | $41,000 |
*Cost of goods sold = Beginning merchandise inventory + Purchases - Ending merchandise inventory
Cost of goods sold = $34,000 + $155,000 - $48,000 = $141,000
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