Taylor Company has the following account balances, extracted from its multiple-step income statement for the current year.
Compute the missing amounts.
Sales = $118,200
Sales Returns and Allowances = 3,200
Sales Discounts = 3,500
Net Sales = ?
Cost of Goods Sold = ?
Gross Profit = 59,200
Selling Expenses = 8,300
General and Administrative Expenses = 10,800
Total Operating Expenses = ?
Net Income = ?
An income statement is an important financial statement. It shows a summarized report on revenues and expenses for the period ended. The difference between the revenues and expense is known as net income.
Answer and Explanation:
1. Let us compute the net sales.
- Net sales = Sales - Sales Returns and Allowances - Sales Discounts
- Net sales = $118,200 - $3,200 - $3,500 = $111,500
The net sales is $111,500.
2.Let us compute the cost of goods sold.
- Cost of goods sold = Net sales - Gross profit
- Cost of goods sold = $111,500 - $59,200 = $52,300
The cost of goods sold is $52,300.
3. Let us compute the total operating expenses.
- Total operating expenses = Selling Expenses + General and Administrative Expenses
- Total operating expenses = $8,300 + $10,800 = $19,100
The total operating expenses is $19,100.
4. Let us compute the net income.
- Net income = Gross profit - Total operating expenses
- Net income = $59,200 - $19,100 = $40,100
The net income is $40,100
The multi-step income statement for the current year is shown as follows:
|Sales Returns and Allowances||($3,200)|
|Cost of Goods Sold||(52,300)|
|General and Administrative Expenses||10,800|
|Total Operating Expenses||19,100|
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from Accounting 101: Financial AccountingChapter 2 / Lesson 2