Respuesta :
Answer:
1. Prepare an income statement for Allstar for the past month.
The income statement is given below.
Sales $ 410,000
Commission Cost ($ 50,000)
Technology Cost ($ 75,000)
R/D Cost* ($ 200,000)
Selling expenses ($ 10,000)
Admin expenses ($ 35,000)
Net profit $ 40,000
* In absence of information it is assumed that research and development costs of $200,000 meet defination of expense as per accounting standard (IAS 38).
2. Briefly explain why Allstar's income statement has no line for cost of goods sold.
As per question Allstars is a service oriented company. In services oriented company there is no good that company is manufacturing and selling. So there will not be any cost of good sold line item in income statement.
Answer:
1) Operating Income is $40,000
2) Allstar is a Service Offering Company
Explanation:
Question 1: To prepare Income Statement for Allstar for the past Month
All-Star Company Income Statement for the Past Month
Particulars Amount
Sales Revenue $410,000
Deduct:
Operating Expenses
Technology Cost $75,000
Commission Costs $50,000
Research and Development $200,000
Selling Expenses $10,000
Administrative Expenses $35,000 ($370,000)
Operating Income $40,000
2) Why there is no cost of goods sold
Allstar Exposure is a service firm meaning it does not produce goods but only renders services. Since cost of goods only pertain to inventory and only manufacturing or goods producing industries have inventory, Allstar will not have any cost of goods.