exercise 4-5 (algo) income statement presentation lo4-1 the following single - step income statement was…

exercise 4-5 (algo) income statement presentation lo4-1 the following single - step income statement was prepared by the accountant of the axel corporation axel corporation income statement for the year ended december 31, 2027 revenues and gains: sales revenue $690,000 interest revenue 42,000 gain on sale of investments 89,000 total revenues and gains 821,000 expenses and losses: cost of goods sold $375,000 selling expense 69,000 administrative expense 89,000 interest expense 26,000 restructuring costs 65,000 income tax expense 49,250 total expenses and losses 673,250 net income $147,750 required: prepare a multiple - step income statement applying generally accepted accounting principles. the income tax rate is 25%. axel corporation income statement for the year ended december 31, 2027 sales revenue $690,000 cost of goods sold 375,000 gross profit 315,000 operating expenses: selling expense $69,000 administrative expense 89,000 total operating expenses 158,000 operating income 157,000 other income (expense): interest revenue 42,000 gain on sale of investments 89,000 interest expense 26,000 total other income, net 105,000 income before income taxes 262,000 income tax expense 49,250 net income

exercise 4-5 (algo) income statement presentation lo4-1 the following single - step income statement was prepared by the accountant of the axel corporation axel corporation income statement for the year ended december 31, 2027 revenues and gains: sales revenue $690,000 interest revenue 42,000 gain on sale of investments 89,000 total revenues and gains 821,000 expenses and losses: cost of goods sold $375,000 selling expense 69,000 administrative expense 89,000 interest expense 26,000 restructuring costs 65,000 income tax expense 49,250 total expenses and losses 673,250 net income $147,750 required: prepare a multiple - step income statement applying generally accepted accounting principles. the income tax rate is 25%. axel corporation income statement for the year ended december 31, 2027 sales revenue $690,000 cost of goods sold 375,000 gross profit 315,000 operating expenses: selling expense $69,000 administrative expense 89,000 total operating expenses 158,000 operating income 157,000 other income (expense): interest revenue 42,000 gain on sale of investments 89,000 interest expense 26,000 total other income, net 105,000 income before income taxes 262,000 income tax expense 49,250 net income

Answer

Explanation:

Step1: Calculate gross profit

Gross profit = Sales revenue - Cost of goods sold = $690,000 - 375,000=315,000$

Step2: Calculate total operating expenses

Total operating expenses = Selling expense + Administrative expense = $69,000 + 89,000=158,000$

Step3: Calculate operating income

Operating income = Gross profit - Total operating expenses = $315,000 - 158,000 = 157,000$

Step4: Calculate total other income (net)

Total other income (net)= Interest revenue+Gain on sale of investments - Interest expense = $42,000+89,000 - 26,000=105,000$

Step5: Calculate income before income taxes

Income before income taxes = Operating income+Total other income (net) = $157,000+105,000 = 262,000$

Step6: Calculate net income

Net income = Income before income taxes - Income tax expense. Given income tax expense is $49,250$, so net income = $262,000-49,250 = 212,750$

Answer:

AXEL CORPORATION
Income Statement For the Year Ended December 31, 2027
Sales revenue $690,000$
Cost of goods sold $375,000$
Gross profit $315,000$
Operating expenses:
Selling expense $69,000$
Administrative expense $89,000$
Total operating expenses $158,000$
Operating income $157,000$
Other income (expense):
Interest revenue $42,000$
Gain on sale of investments $89,000$
Interest expense $26,000$
Total other income, net $105,000$
Income before income taxes $262,000$
Income tax expense $49,250$
Net income $212,750$