Sam Peters is the sole proprietor of Charismatic Cats, a business specializing in the sale of high-end pet gifts and accessories. Charismatic Cats' sales totaled $ 1 comma 060 comma 000 during the most recent year. During the year, the company spent $ 53 comma 000 on expenses relating to website maintenance, $ 33 comma 200 on marketing, and $ 28 comma 500 on wrapping, boxing, and shipping the goods to customers. Charismatic Cats also spent $ 636 comma 000 on inventory purchases and an additional $ 19 comma 500 on freight-in charges. The company started the year with $ 19 comma 800 of inventory on hand, and ended the year with $ 13 comma 100 of inventory. Prepare Charismatic Cats' income statement for the most recent year

Charismatic Cat's Income Statement for the recent year:

Sales $1,060,000

Less Cost of Sales: $662,200

Gross Profit = $397,800

Less Selling & Administration - $114,700

Net Income - $283,100

Explanation:

a) cost of goods sold includes opening inventory plus purchases, including freight-in, less closing inventory:

Beginning Inventory - $19,800

Purchases - $636,000

Freight-in - $19,500

Less Closing Inventory - $13,100

b) Selling and Administration expenses include the cost of website maintenance, cost of shipping and wrapping boxes, and marketing.

c) Cost of goods sold is deducted from the sales to arrive at the gross profit, which compares the sales income with the sales cost.

d) Net income is a sum of gross profit less all the marketing, selling, and administration expenses incurred in running the business.  This figure represents the gain made from being in business.

Administration - Website maintenance - $53,000

Selling Expenses - $61,700 (marketing - $33,200 + Wrapping box & shipping- $28,500)