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Problem 8-27 (continued)
4.
Shilow Company
Income Statement
For the Quarter Ended June 30
Sales ($60,000 + $72,000 + $90,000) .......
$222,000
Cost of goods sold:
Beginning inventory (Given) ...................
$ 36,000
Add purchases (Part 2) ...........................
159,300
Goods available for sale ..........................
195,300
Ending inventory (Part 2) .......................
28,800
166,500
*
Gross margin ............................................
55,500
Selling and administrative expenses:
Commissions (12% of sales) ...................
26,640
Rent ($2,500 × 3) ..................................
7,500
Depreciation ($900 × 3) .........................
2,700
Other expenses (6% of sales) .................
13,320
50,160
Net operating income ...............................
5,340
Interest expense (Part 4) ..........................
230
Net income ..............................................
$ 5,110
* A simpler computation would be: $222,000 × 75% = $166,500.
