# Taylor Company has the following account balances, extracted from its multiple-step income...

## Question:

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 = ? ## Income Statement: 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 $118,200 Sales Returns and Allowances ($3,200) Sales Discounts (3,500) Net Sales 111,500 Cost of Goods Sold (52,300) Gross Profit 59,200 Selling Expenses 8,300 General and Administrative Expenses 10,800 Total Operating Expenses 19,100 Net Income \$40,100 