Exercise 4-11

The following are selected ledger accounts of Headland Corporation at December 31, 2017.

Cash		$188,800		Salaries and wages expense (sales)		$287,800
Inventory		538,800		Salaries and wages expense (office)		349,800
Sales revenue		4,278,800		Purchase returns		18,800
Unearned sales revenue		120,800		Sales returns and allowances		82,800
Purchases		2,789,800		Freight-in		75,800
Sales discounts		37,800		Accounts receivable		146,300
Purchase discounts		30,800		Sales commissions		86,800
Selling expenses		72,800		Telephone and Internet expense (sales)		20,800
Accounting and legal services		36,800		Utilities expense (office)		35,800
Insurance expense (office)		27,800		Miscellaneous office expenses		11,800
Advertising expense		57,800		Rent revenue		243,800
Delivery expense		96,800		Casualty loss (before tax)		73,800
Depreciation expense (office equipment)		51,800		Interest expense		179,800
Depreciation expense (sales equipment)		39,800		Common stock ($10 par)		903,800

Headlands effective tax rate on all items is 34%. A physical inventory indicates that the ending inventory is $689,800. Prepare a condensed 2017 income statement for Headland Corporation.

HEADLAND CORPORATION Income Statement For the Year Ended Dec Net Sales 4158200 Cost of Goods Sold 2665000 1493200 Gross Profit / (Loss) Administrative Expenses Selling Expenses 613400 565000 1178400 Income From Operation 314800 Income Before Income Net Income (Loss)