Question

Candace Communications reported the following figures from its adjusted trial balance for its first year of business, which ended on July 31, 2018: E: (Click the icon to view the accounts and balances.) Prepare Candace Communications's multi-step income statement for the year ended July 31, 2018. (Use a minus sign or parentheses to show other expenses.) Candace Communications Income Statement Year Ended July 31, 2018 Net Income (Loss) Year Ended July 31, 2018 Gross Profit Net Sales Revenue Operating Expenses: Operating Income Other Income and (Expenses) Revenues Total Operating Expenses Total Other Income and (Expenses) Cash $ 3,400 Cost of Goods Sold $ 19,800 8,600 Selling Expenses Accounts Payable 1,300 Equipment, net 5,200 Accrued Liabilities 1,700 Common Stock 2,345 Net Sales Revenue 29,000 800 Accounts Receivable 2,700 Notes Payable, long-term Merchandise Inventory Administrative Expenses 400 Interest Expense 45 2,800

Answer 1

A multi-step income statement for Candace Communications is prepared by subtracting the explicit costs, which include Cost of Goods Sold and Operating Expenses, from the Net Sales Revenue and then adjusting for Other Income and Expenses to find the Net Income (Loss).

Step-by-step explanation:

Preparing a Multi-Step Income Statement

To prepare the multi-step income statement for Candace Communications for the year ended July 31, 2018, we must follow these steps:

First, we determine the Net Sales Revenue, which is given as $29,000.

Next, we subtract the Cost of Goods Sold (COGS) from the Net Sales Revenue to find the Gross Profit. The COGS is $19,800, so the Gross Profit would be $29,000 - $19,800 = $9,200.

Then we add up all the Operating Expenses, which include Selling Expenses ($8,600) and Administrative Expenses ($400), totaling to $9,000 ($8,600 + $400).

We subtract the Total Operating Expenses from the Gross Profit to calculate the Operating Income. In this case, it would be $9,200 - $9,000 = $200.

We also need to account for Other Income and Expenses. According to the provided data, there is Interest Expense of $45.

Therefore, we subtract the Interest Expense from the Operating Income to find the Net Income (Loss) which would be $200 - $45 = $155.

After completing these steps, the final income statement will show a Net Income of $155.

Candace Communications Income Statement

For the Year Ended July 31, 2018

Net Sales Revenue: $29,000

Cost of Goods Sold: $19,800

Gross Profit: $9,200

Total Operating Expenses: $9,000

Operating Income: $200

Interest Expense: $45

Net Income (Loss): $155