Financial Accounting Practice Test

Practice set-3

The Income Statement

PROBLEM

1. The accounts of the Vrabec Corporation at December 31 are shown below:

|Account |Balance |

|Advertising Expense |$    7,200 |

|Beginning Retained Earnings |46,800 |

|Commissions on Sales |9,600 |

|Ending Retained Earnings |? |

|Depreciation Expense |7,800 |

|Dividends Declared |28,800 |

|Insurance Expense |5,400 |

|Interest Expense |12,600 |

|Research and Development Expense |3,600 |

|Sales |466,200 |

|Sales Salaries |18,000 |

|Cost of Goods Sold |243,900 |

|Income tax rate |35% |

Required: Prepare in good form a multi-step income statement for the year ended December 31, 2005. Where appropriate, condense expenses into (1) selling expenses, and (2) general and administrative expenses.

ANS:

|Vrabec Corporation...