Question

The following is a partial trial balance for the Green Star Corporation as of December 31, 2018: Account Title Debits Credits Sales revenue 1,300,000 Interest revenue 30,000 Gain on sale of investments 50,000 Cost of goods sold 720,000 Selling expenses 160,000 General and administrative expenses 75,000 Interest expense 40,000 Income tax expense 130,000 Required: Prepare a multiple-step income statement for 2018.

Answer 1

Multiple-step income statement for 2018.

Sales revenue 1,300,000

Cost of goods sold (720,000)

Gross Profit 580,000

Less Operating Expenses :

Gain on sale of investments 50,000

Selling expenses (160,000)

General and administrative expenses (75,000) (185,000)

Operating Profit 395,000

Less Non - Operating Expenses :

Interest revenue 30,000

Interest expense (40,000)

Income tax expense (130,000) (140,000)

Net Income / (Loss) 225,000

Step-by-step explanation:

The Multi-step Income statement shows separately Profit derived from Primary Activities (Operating Profit) of the company against profit and the profit derived from the Secondary Activities (Net Profit) of the company.