PROBLEMS Problem 1- Pertinent accounts gathered from the records of Karla Company for the year 2019 are given below: Purchases Purchase returns and allowances 5,250,000 150,000 Rental income 250,000...

Extracted text: PROBLEMS Problem 1- Pertinent accounts gathered from the records of Karla Company for the year 2019 are given below: Purchases Purchase returns and allowances 5,250,000 150,000 Rental income 250,000 Selling expenses: Freight out Salesmen's commission 175,000 650,000 Depreciation- store equipment 125,000 Merchandise inventory- January 1 Merchandise inventory- December 31 Sales 1,000,000 1,500,000 7,650,000 Sales returns and allowances 140,000 Sales discount 10,000 Administrative expenses: Officers' salaries 500,000 Depreciation- office equipment 300,000 Freight in Income tax 500,000 250,000 Loss on sale of equipment Purchase discounts 50,000 100,000 Dividend revenue 150,000 50,000 Loss on sale of investment Required: Prepare an income statement for the year 2019 using the functional method with supporting notes.