Question

g 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, $2,140; cost of goods sold, $1,300; selling expense, $145; general and administrative expense, $135; interest expense, $60; and gain on sale of investments, $80. Income tax expense has not yet been recorded. The income tax rate is 25%. Prepare a multiple-step income statement for 2021.

Answer 1

Net income is $435

Step-by-step explanation:

A multi-step income statement is an income statement that shows the detailed expenses, income and total profit of a company for a articular period by using multiple equations to estimate the net income of the company.

This can be prepared as follows:

Pacific Scientific Corporation

Multiple-step income statement for 2021

Details $' million

Sales revenue 2,140

Cost of goods sold (1,300)

Gross profit 840

Selling expense (145)

General and administrative expense (135)

Operating income 560

Other income:

Gain on sale of investments 80

Income before interest 640

Interest expense (60)

Income before tax 580

Income tax expense (25% * 580) (145)

Net income 435