Sales discounts $ 950Office salaries expense 4,000Rent expense—Office space 3,500Advertising expense 900Sales returns and allowances 450Office supplies expense 900Cost of goods sold 13,000Sales 60,000Insurance expense 3,000Sales staff salaries expense 4,500Prepare a multiple-step income statement for the year ended December 31.
Question
Sales discounts $ 950Office salaries expense 4,000Rent expense—Office space 3,500Advertising expense 900Sales returns and allowances 450Office supplies expense 900Cost of goods sold 13,000Sales 60,000Insurance expense 3,000Sales staff salaries expense 4,500Prepare a multiple-step income statement for the year ended December 31.
Solution
Sure, here is a multiple-step income statement for the year ended December 31:
Sales: 450 Less: Sales Discounts: 58,600
Cost of Goods Sold: 45,600
Operating Expenses: Office Salaries Expense: 3,500 Advertising Expense: 900 Insurance Expense: 4,500 Total Operating Expenses: $16,800
Net Income: $28,800
This income statement starts with sales and then subtracts sales returns and allowances and sales discounts to arrive at net sales. Then, the cost of goods sold is subtracted from net sales to calculate the gross profit. After that, all operating expenses are listed and subtracted from the gross profit to arrive at the net income.
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