Multi-Step Income Statement

 
Scenario: An inexperienced accountant prepared this condensed income statement for Simon Company, a retail firm that has been in business for a number of years.
SIMON COMPANY
Income Statement
For the Year Ended December 31, 2017
Revenues
Net sales
$850,000

Other revenues
22,000
872,000

Cost of goods sold
555,000
Gross profit
317,000

Operating expenses
Selling expenses
109,000

Administrative expenses
103,000
212,000 

Net earnings
$105,000

As an experienced, knowledgeable accountant, you review the statement and determine the following facts:

Net sales consist of: sales $911,000, less freight-out on merchandise sold $33,000, and sales returns and allowances $28,000.
Other revenues consist of sales discounts $18,000 and rent revenue $4,000.
Selling expenses consist of salespersons’ salaries $80,000, depreciation on equipment $10,000, advertising $13,000, and sales commissions $6,000.  The commissions represent commissions paid. At December 21, $3,000 of commissions have been earned by salespersons but have not been paid.  All compensation should be recorded as Salaries and Wages Expense.
Administrative expenses consist of office salaries $47,000, dividends $18,000, utilities $12,000, interest expense $2,000, and rent expense $24,000, which includes prepayments totaling $6,000 for the first quarter of 2018. 

Prepare a detailed multi-step income statement with a brief explanation of 700 words (your explanation must be in a Word document and formatted per APA guidelines). Assume a 25% tax rate. 

 Show your work on the Excel® spreadsheet