Assignment

Function of Expense Method:

Youth Company
Income Statement
For the year ended December 31, 2015

Net Sales (1) 7, 700, 000

Cost of sales (2) (5, 000, 000)
Gross income 2, 700, 000
Other income 400, 000
Total income 3, 100, 000
Expenses:
Selling expense (4) 950, 000
Administrative expense (5) 800, 000
Other expenses (6) 100, 000

1, 850, 000

Income Before tax 1, 250, 000

Income Tax (250, 000)
Net income 1, 000, 000
Note 1-Net sales
Sales 7, 850, 000
Sales return & allowances (140, 000)
Sales discounts (10, 000)
Net purchases 7, 700, 000

Cost of sales- Note 2

Inventory beg. 1, 000, 000
Purchases 5, 250, 000
Purchase return & allowances (150, 000)
Purchase discounts (100, 000)
Net purchases 5, 000, 000
Freight in 500, 000
Goods available for sale 6, 500, 000
Inventory end (1, 500, 000)
Cost of sales 5, 000, 000
Note 3- Other income
Rental income 250, 000
Dividend income 150, 000
Total other income 400, 000

Note 4- Selling Expenses

Freight out 175, 000

Salesmen’s commissions 650, 000
Depreciation-store equipment 125, 000
Selling expenses 950, 000

Note 5- Administrative expenses

Officer’s salaries 500, 000

Depreciation- office equipment 300, 000
Administrative expense 800, 000

Note 6-Other expenses

Loss on sale equipment 50, 000

Loss on sale investment 50, 000
Other expense 100, 000
Nature of Expense Method:

Youth Company
Income Statement
For the year ended December 31, 2015

Net Sales (1) 7, 700, 000

Other income (2) 400, 000
Total income 8, 100, 000
Expenses:
Increase in inventory (3) (500, 000)
Net purchases (4) 5, 500, 000
Freight out 175, 000
Salesmen’s commission 650, 000
Depreciation expense (5) 425, 000
Officers expense 500, 000
Other expense (6) 100, 000 6, 850, 000

1, 850, 000

Income Before tax 1, 250, 000

Income Tax (250, 000)
Net income 1, 000, 000

Note 1-Net sales

Sales 7, 850, 000
Sales return & allowances (140, 000)
Sales discounts (10, 000)
7, 700, 000

Other income- Note 2

Rental income 250, 000
Dividend Income 150, 000

400, 000

Note 3- Increase in Inventory

Inventory End 1, 500, 000
Inventory beg. 1, 000, 000
500, 000
Note 4- Net Purchases

Purchases 5, 250, 000

Purchase return & allowances (150, 000)
Purchase discounts (100, 000)
Freight in 500, 000
Net purchases 5, 500, 000

Note 5- Depreciation Expense

Depreciation- office equipment 300, 000

Depreciation- store equipment 125, 000
Depreciation expense 425, 000

Note 6-Other expenses

Loss on sale equipment 50, 000

Loss on sale investment 50, 000
Other expense 100, 000