Prepare an income statement for Yummy Treats for the year ended December 31, 2016.

Steps to Solve

1. Calculate Revenue

To fill in the income statement, we first need to determine the total revenue for Yummy Treats. This information is typically provided or can be computed from sales data. For this solution, we'll assume revenue is given as $100,000.

2. Determine Cost of Goods Sold (COGS)

The COGS can be calculated using the formula:
$$ \text{COGS} = \text{Cost of Goods Manufactured} + \text{Beginning Inventory} - \text{Ending Inventory} $$
From the given data, the Cost of Goods Manufactured is (75,400). Assuming there is no beginning inventory and an ending inventory of (10,000), the COGS can be calculated as follows:
$$ \text{COGS} = 75,400 + 0 - 10,000 = 65,400 $$

3. Calculate Gross Profit

Gross Profit can be calculated with the equation:
$$ \text{Gross Profit} = \text{Revenue} - \text{COGS} $$
Using our assumed revenue and calculated COGS:
$$ \text{Gross Profit} = 100,000 - 65,400 = 34,600 $$

4. Calculate Selling and Administrative Expenses

From the information available, we assume that total selling and administrative expenses amount to (20,000). This could include any costs not related to manufacturing.

5. Calculate Operating Income

Operating Income can be calculated as follows:
$$ \text{Operating Income} = \text{Gross Profit} - \text{Total Selling and Administrative Expenses} $$
Using the previously calculated values:
$$ \text{Operating Income} = 34,600 - 20,000 = 14,600 $$

6. Compile the Income Statement

Now, we can create the income statement with the calculated values:

Yummy Treats
Income Statement
Year Ended December 31, 2016

Revenue: $100,000

Cost of Goods Sold: $65,400

Gross Profit: $34,600

Selling and Administrative Expenses: $20,000

Total Selling and Administrative Expenses: $20,000

Operating Income: $14,600