QS 5-12 Preparing a multi-step income statement LO P4 Save-the-Earth Co. reports the following income statement accounts for the year ended December 31. Sales discounts $ 790 Office salaries expense 2,400 Rent expense-Office space 1,900 Advertising expense 580 Sales returns and allowances 290 Office supplies expense 580 Cost of goods sold 9,800 Sales 28,000 Insurance expense 1,400 Sales staff salaries 2,900 Required: Prepare a multiple-step income statement for the year ended December 31.

Question

Antonio Harmon

Business

20 February, 05:44

QS 5-12 Preparing a multi-step income statement LO P4 Save-the-Earth Co. reports the following income statement accounts for the year ended December 31. Sales discounts $ 790 Office salaries expense 2,400 Rent expense-Office space 1,900 Advertising expense 580 Sales returns and allowances 290 Office supplies expense 580 Cost of goods sold 9,800 Sales 28,000 Insurance expense 1,400 Sales staff salaries 2,900 Required: Prepare a multiple-step income statement for the year ended December 31.

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Wilber · Answer 1

Multi step income statement is a more detailed way of reporting profit and loss compared to the single step as it entails the use of series of equation to arrive at the net income.

Workings

Income Statement for Save - the - Earth for the year Ended Dec. 31

Sales 28,000

Sales discount 790

sales return 290 (1080)

and allowance

Net sales 26,920

Cost of goods 9,800

Gross profit 17,120

Expenses

Selling expenses

Staff Salary 2900

Rent 1900

Advertising 580

Total Selling expenses 5380

General admin expenses

Office salary 2400

Insurance expenses 1400

Office supplies 580

Total general admin expenses 4380

Total expenses 9,760

Net income 7,360