Question

Progress Presented below is information for Sunland Company for the month of January 2022. Cost of goods sold $278,000 Rent expense $30,000 Freight-out 7,300 Sales discounts 5,300 Insurance expense 12,400 Sales returns and allowances 13,000 Salaries and wages expense 48,000 Sales revenue 432,000 Prepare a multiple-step income statement.

Answer 1

Sunland Company

Income statement for the year ended December 31, 2020

Amount in $'000

Sales 432

Less;

Sales returns and allowances (13)

Sales discounts (5.3)

Net Sales 413.7

Cost of goods sold (278)

Gross profit 135.7

Operating expenses

Freight-out (7.3)

Salaries and wages expense (48)

Rent expense (30)

Insurance expense (12.4)

Net Income/(loss) 38

Step-by-step explanation:

A multi-step income statement is one in which the elements of incomes and expenses are grouped into operating and non-operating heads.

Operating income and expenses are those that are directly related to the ordinary activities of the entity

Answer 2

Net profit $38,000

Step-by-step explanation:

Sunland Company

Multiple -step Income statement

$

Sales revenue 432,000

Sales returns (13,000)

Net sales 419,000

Cost of goods sold ( 278,000)

Gross profit 141,000

Expenses:

Rent 30,000

Freight-out 7,300

Insurance 12,400

Sales discount 5,300

Salaries and wages 48,000 (103,000 )

Net profit 38,000