The following are selected ledger accounts of Vaughn Corporation at December 31, 2017. Cash $188,840 Salaries and wages expense (sales) $287,840 Inventory 538,840 Salaries and wages expense (office) 349,840 Sales revenue 4,278,840 Purchase returns 18,840 Unearned sales revenue 120,840 Sales returns and allowances 82,840 Purchases 2,789,840 Freight-in 75,840 Sales discounts 37,840 Accounts receivable 146,340 Purchase discounts 30,840 Sales commissions 86,840 Selling expenses 72,840 Telephone and Internet expense (sales) 20,840 Accounting and legal services 36,840 Utilities expense (office) 35,840 Insurance expense (office) 27,840 Miscellaneous office expenses 11,840 Advertising expense 57,840 Rent revenue 243,840 Delivery expense 96,840 Casualty loss (before tax) 73,840 Depreciation expense (office equipment) 51,840 Interest expense 179,840 Depreciation expense (sales equipment) 39,840 Common stock ($10 par) 903,840 Vaughn’s effective tax rate on all items is 34%. A physical inventory indicates that the ending inventory is $689,840. Prepare a condensed 2017 income statement for Vaughn Corporation.

CONDENSED INCOME STATEMENT

Sales Revenue(4,278,840 -82840)                                           $4,196,000

cost of goods sold                                                                    - $2,695,840

Gross profit                                                                                  $1,500,160

Operating incomes                                                                      $274,680

rent revenue                                                     243,840

purchase discount                                              30,840

Gross operating income                                                             $1,774,840

Total expenses                                                                           -$1,440,600

salaries and wages (287,840 +349840)  = 637,680

sales discount                                                 37,840

sales commission                                           86,840

selling expenses                                             72,840

telephone and internet expense                   20,840

Accounting and legal expenses                    36,840

utilities expense                                              35,840

Miscellaneous office expense                        11,840

Advertising                                                       57,840

Delivery expense                                            96,840

Casualty loss                                                   73,840

Depreciation (39,840 + 51,840 )=                   91,680

interest expense                                             179,840

Profit before Tax                                                                       $334,240

Tax expense 34%                                                                    -$136,641.6

Net Income                                                                                $220,598.40

Explanation:

cost of goods sold   = 2,698,840

opening                   = 538840

purchases               = 2,789,840

freight-in                 = 75,840

purchases Return  = -18840

closing                   = 689,840

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