For Glad Rags Shops, the Following Information Is Available for the Year

question 34

Essay

For Glad Rags Shops, the following information is available for the year ended December 31, 2014: $$\begin{array} { | l | r | } \hline \text { Sales revenue } & \$ 4,200,000 \\\hline \text { Cost of goods sold } & 2,650,000 \\\hline \text { Salaries expense } & 500,000 \\\hline \text { Rent expense } & 300,000 \\\hline \text { Administrative expense } & 250,000 \\\hline \text { Dividends declared } & 10,000 \\\hline\end{array}$$ The income tax is $150,000.
Requirement:
Prepare an income statement for Glad Rags Shops.

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Definitions:

Operating Expenses

Costs associated with a company's main operational activities, excluding the cost of goods sold, such as rent, salaries, and utilities.

Variable Costs

Costs that vary in direct proportion to changes in the level of production or activity within a business.

Incremental Analysis

A decision-making technique used to determine the financial impact of different choices by comparing their costs and benefits.

Variable Cost

Expenses that fluctuate with production volume, such as direct materials and direct labor costs.