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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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  1. 20 February, 06:03
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    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
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