Herrera,Inc Required: Prepare an Income Statement for Herrera,Inc

question 205

Essay

Herrera,Inc.,a merchandiser,sells office supplies.The following information summarizes Herrera's operating activities during the year:
$$\begin{array} { | l | r | } \hline \text { Utilities Expense } & \$ 6,000 \\\hline \text { Rent for Store Expense } & 8,000 \\\hline \text { Sales Commissions Expense } & 4,500 \\\hline \text { Purchases of Merchandise } & 54,000 \\\hline \text { Merchandise Inventory on January 1 } & 30,000 \\\hline \text { Merchandise Inventory on December } 31 & 20,500 \\\hline \text { Sales Revenue } & 108,000 \\\hline\end{array}$$ Required: Prepare an income statement for Herrera,Inc.for the year ended December 31,using the format below.Include a proper heading.
$$\begin{array} { | l | l | l | } \hline \text { Sales Revenue } & & \\\hline \text { Cost of Goods Sold: } & & \\\hline \text { Beginning Inventory } & & \\\hline \text { Purchases } & & \\\hline \text { Cost of Goods Available for Sale } & & \\\hline \text { Ending Inventory } & & \\\hline \text { Cost of Goods Sold } & & \\\hline \text { Gross Profit } & & \\\hline \text { Selling Expenses: } & & \\\hline \text { Sales Commissions Expense } & & \\\hline \text { Administrative Expenses: } & & \\\hline \text { Rent Expense } & & \\\hline \text { Utilities Expense } & & \\\hline \text { Total Operating Expenses } & & \\\hline \text { Operating Income } & & \\\hline\end{array}$$

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Definitions:

Professional Misconduct

Inappropriate or unethical behavior by a professional as defined by their profession's standards.

Malpractice

Failure of a professional to perform their duties to the required standard of care, resulting in harm to their client or patient.

Due Care

The level of judgment, attention, and diligence reasonably expected from, and ordinarily exercised by, a person under a particular circumstance.

Efficiency Wages

Efficiency wages refer to the concept where employers pay higher than the market-clearing wage to increase productivity, reduce turnover, and encourage loyalty among employees.