Assume that you are the president of Influence Corporation. At the end of the first year (December 31) of operations, the following financial data for the company are available:

Cash: $14,800
Receivables from customers (all considered collectible): 11,200
Inventory of merchandise (based on physical count and priced at cost): 28,500
Equipment owned, at cost less used portion: 67,500
Accounts payable owed to suppliers: 32,100
Salary payable (on December 31, this was owed to an employee who will be paid on January 10): 1,650
Total sales revenue: 103,000
Expenses, including the cost of the merchandise sold (excluding income taxes): 70,000
Income tax expense at 25% x pretax income; al paid during December of the current year: ?
Common stock at the end of the current year: 63,500

No dividends were declared or paid during the first year. The beginning balances in Common stock and Retained Earnings are zero because it is the first year of operations.

Prepare a summarized income statement for the year. 

To prepare the summarized income statement for Influence Corporation's first year of operations, we will calculate the key elements such as **pretax income**, **income tax expense**, and **net income**, based on the given data.

### 1. **Income Statement Structure:**

An income statement typically consists of the following elements:
- **Sales Revenue**
- **Expenses (including the cost of goods sold)**
- **Pretax Income**
- **Income Tax Expense**
- **Net Income**

Let's break down these elements.

### 2. **Sales Revenue:**
- Total sales revenue: **$103,000**

### 3. **Expenses:**
- Given total expenses: **$70,000** (includes the cost of merchandise sold and other operating expenses, excluding income taxes)

### 4. **Pretax Income:**
- Pretax income is calculated as:  
  \[
  \text{Pretax Income} = \text{Sales Revenue} - \text{Expenses}
  \]
  \[
  \text{Pretax Income} = 103,000 - 70,000 = 33,000
  \]

### 5. **Income Tax Expense:**
- Income tax expense is calculated at a rate of 25% of the pretax income:  
  \[
  \text{Income Tax Expense} = 25\% \times 33,000 = 0.25 \times 33,000 = 8,250
  \]

### 6. **Net Income:**
- Net income is calculated by subtracting the income tax expense from the pretax income:  
  \[
  \text{Net Income} = \text{Pretax Income} - \text{Income Tax Expense}
  \]
  \[
  \text{Net Income} = 33,000 - 8,250 = 24,750
  \]

### **Summarized Income Statement for Influence Corporation**
For the Year Ended December 31

| **Item**              | **Amount ($)** |
|-----------------------|----------------|
| **Sales Revenue**      | 103,000        |
| **Expenses**           | (70,000)       |
| **Pretax Income**      | 33,000         |
| **Income Tax Expense** | (8,250)        |
| **Net Income**         | **24,750**     |

### Conclusion:
- The **net income** for the year is **$24,750**.

Would you like more details or have any questions about this statement?

Here are 5 additional questions that expand on this information:
1. How does the net income affect the retained earnings at year-end?
2. What is the effect of income taxes on profitability?
3. How would dividends affect the retained earnings if declared?
4. How would a change in the income tax rate alter the net income?
5. Can you calculate the profit margin based on the net income and sales revenue?

**Tip:** When analyzing financial statements, always consider the relationship between net income and retained earnings for understanding how profits are reinvested or distributed.

Assume that you are the president of Influence Corporation. At the end of the first year (December 31) of operations, the following financial data for the company are available:

Cash: $14,800
Receivables from customers (all considered collectible): 11,200
Inventory of merchandise (based on physical count and priced at cost): 28,500
Equipment owned, at cost less used portion: 67,500
Accounts payable owed to suppliers: 32,100
Salary payable (on December 31, this was owed to an employee who will be paid on January 10): 1,650
Total sales revenue: 103,000
Expenses, including the cost of the merchandise sold (excluding income taxes): 70,000
Income tax expense at 25% x pretax income; all paid during December of the current year: ?
Common stock at the end of the current year: 63,500

No dividends were declared or paid during the first year. The beginning balances in Common stock and Retained Earnings are zero because it is the first year of operations.

Prepare a summarized income statement for the year.

Learn how to prepare a summarized income statement for Influence Corporation's first year of operations. This problem covers key financial accounting concepts such as calculating pretax income, income tax expense, and net income. The total sales revenue is $103,000, expenses are $70,000, and the income tax rate is 25%. Suitable for college-level accounting students.

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