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    Income statement ignoring income tax ramifications

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    Last year, SOS a service company had sales of $820,000
    and collected $700,000 cash from its sales; its customers still owed SOS $120,000 at the end of the year. Total Operating Expenses for the year were $620,000 including $90,000 of Depreciation Expense. All expenses, except depreciation was paid in cash.

    Please ignore the income tax ramifications.

    a) Prepare an Income Statement
    b) Prepare a Statement of Cash Provided by Operating
    Activities using the Direct Method.

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    Solution Preview

    Income Statement

    Sales $820,000
    Less Expenses ($620,000)

    Solution Summary

    The income statement ignoring income tax ramifications are discussed. The statement of cash provided by operating is prepared.