Precious CurlsPrecious Curls is a retail chain specializing in salon-quality hair-care products. During the year, Precious CurlsPrecious Curls had sales of $ 39 comma 388 comma 000$39,388,000. The company began the year with $ 3 comma 500 comma 000$3,500,000 of merchandise inventory and ended the year with $ 4 comma 445 comma 000$4,445,000 of inventory. During the year, Precious CurlsPrecious Curls purchased $ 23 comma 350 comma 000$23,350,000 of merchandise inventory. The company's selling, general, and administrative expenses totaled $ 5 comma 450 comma 000$5,450,000 for the year. Prepare Precious Curls'Precious Curls' income statement for the year.

Instructions are listed below

Explanation:

Giving the following information:

Sales = $39,388,000.

The company began the year with:

$3,500,000 of merchandise inventory

Ended the year with:

$4,445,000 of inventory.

During the year:

Purchased $23,350,000 of merchandise inventory.

The company's selling, general, and administrative expenses totaled $5,450,000 for the year.

First, we need to calculate the cost of goods sold:

COGS = beginning merchandise inventory + purchases - ending merchandise inventory

COGS = 3,500,000 + 23,350,000 - 4,445,000 = $22,405,000

Income statement:

Sales = 39,388,000

COGS = 22,405,000

Gross income = 16,983,000

Selling, general, and administrative expenses = 5,450,000

Operating income = $11,533,000