Question

The adjusted trial balance of Pacific Scientific Corporation on December 31, 2021, the end of the company's fiscal year, contained the following income statement items ($ in millions): sales revenue, $2,106; cost of goods sold, $1,240; selling expense, $126; general and administrative expense, $105; interest expense, $40; and gain on sale of investments, $45. Income tax expense has not yet been recorded. The income tax rate is 25%. Prepare a multiple-step income statement for 2021. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Answer 1

The preparation of the multi step income statement is shown below

Pacific Scientific Corporation

Multi - step income statement

On December, 2021

Sales revenues $2,106

Less: Cost of goods sold -$1,240

Gross profit $866

Operating expenses

Less: Selling expenses -$126

Less: General and administrative expense -$105

Total operating expenses -$231

Operations income $635

Non operating and other items

Interest expenses -$40

Gain on sale of investment $45

Total non operating $5

Earning before taxes $640

Less- Income tax expense at 30% -$160

Net income $480