Question

The following is a listing of all of the income statement accounts for Mulberry Street Sportswear as they appear on the adjusted trial balance as of December 31:

Advertising Expense $10,200
Cost of Goods Sold 87,900
Delivery Expense 4,300
Insurance Expense 1,400
Income Tax Expense 5,960
Rent Expense 10,700
Interest Expense 1,900
Sales Revenue 160,400
Sales Discounts 10,800
Sales Returns and Allowances 18,300
Required:
Prepare a multi-step income statement.

Answer 1

A multi-step income statement breaks down a company's revenue and expenses in a more detailed manner. It includes components such as sales revenue, sales discounts, sales returns and allowances, cost of goods sold, gross profit, operating expenses, non-operating expenses, and net income. This statement provides a comprehensive view of a company's financial performance.

Step-by-step explanation:

A multi-step income statement is a financial statement that shows the various components of a company's revenue and expenses. It provides a more detailed breakdown of a company's financial performance. Here is an example of a multi-step income statement for Mulberry Street Sportswear:

1. Sales Revenue: $160,400
2. Sales Discounts: $10,800
3. Sales Returns and Allowances: $18,300
4. Net Sales: (Sales Revenue - Sales Discounts - Sales Returns and Allowances)
5. Cost of Goods Sold: $87,900
6. Gross Profit: (Net Sales - Cost of Goods Sold)
7. Operating Expenses:

• Advertising Expense: $10,200
• Delivery Expense: $4,300
• Insurance Expense: $1,400
• Rent Expense: $10,700

Total Operating Expenses: (Sum of all operating expenses)Operating Income: (Gross Profit - Total Operating Expenses)Non-Operating Expenses:

• Interest Expense: $1,900
• Income Tax Expense: $5,960

Net Income: (Operating Income - Non-Operating Expenses)

Answer 2

Mulberry Street Sportswear multi-step income statement for the year ended December 31.

Sales Revenue 160,400

Less Sales Returns and Allowances (18,300)

Net Sales 142,100

Less Cost of Goods Sold (87,900)

Gross Profit 54,200

Less Operating Expenses

Sales Discounts 10,800

Advertising Expense 10,200

Delivery Expense 4,300

Insurance Expense 1,400

Rent Expense 10,700 (37,400)

Operating Income 16,800

Less Non - Operating Expenses

Interest Expense 1,900

Income Tax Expense 5,960 (7,860)

Net Income / (Loss) 8,940

Step-by-step explanation:

A multi-step income statement shows separately profit earned from primary activities of the company (Operating Income) from that which includes secondary activities of the Company (Net Income).