Given the following information, prepare the first part of the Multi-Step Income Statement (HINT:...

Question:

Given the following information, prepare the first part of the Multi-Step Income Statement (HINT: through Gross Profit)

Selling Expense = 10,000

Inventory = 40,000

Furniture = 40,000

Cash = 30,000

Sales Returns and Allowances = 2,000

Cost of Goods Sold = 40,000

General Expense = 10,000

Sales Revenue = 90,000

Capital = 20,000

Accounts Payable = 15,000

Salary Payable = 17,000

Sales Discount = 4,000

Multi-Step Income Statement:

Multi-step and single-step Income Statement provides the same figure of Net Income; they only vary in presentation. Multi-step income statement segregates operating items from non-operating ones. Operating Revenues are separately reported from non-operating revenues, gains and losses and operating expenses are segregated from non-operating expenses.

Answer and Explanation:

Sales Revenue 90,000
Sales Returns and Allowances -2,000
Sales Discount -4,000
Net Sales 84,000
Cost of Goods Sold -40,000
Gross Profit 44,000
General Expense -10,000
Selling Expense -10,000
Net Income 24,000

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Operations of an Income Statement

from Accounting 101: Financial Accounting

Chapter 8 / Lesson 5
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