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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

Learn more about this topic:

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What Is an Income Statement? - Purpose, Components & Format

from Accounting 101: Financial Accounting

Chapter 2 / Lesson 2
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