Question

In its income statement for the year ended June 30, 2009, The Clorox Company reported the following condensed data (dollars in millions).

Selling and administrative expenses $ 715 Research and development expense $ 114
Net sales 5,450 Income tax expense 276
Interest expense 161 Other expense 46
Advertising expense 499 Cost of goods sold 3,104
Assume a tax rate of 34%.
Assume the marketing department has presented a plan to increase advertising expenses by $340 million. It expects this plan to result in an increase in both net sales and cost of goods sold of 25%.
Prepare a multiple-step income statement. (Round answers to 0 decimal places, e.g. 125.)

Answer 1

Clorox Company

multiple-step income statement.

Net sales $5,450

Less Cost of goods sold ($3,104)

Gross Profit $2346

Less Operating Expenses :

Selling and administrative expenses $ 715

Research and development expense $ 114

Advertising expense $499 ($1,328)

Operating Income $1018

Less Non Operating Expenses :

Income tax expense $276

Interest expense $161

Other expense $46 ($483)

Net income $535

Step-by-step explanation:

The multiple-step income statement shows separately the income derived from primary activities (operating income) and secondary activities (net income)