qs 4-20 (algo) preparing a multiple - step income statement lo p4\nsave - the - earth company reports the…
qs 4-20 (algo) preparing a multiple - step income statement lo p4\nsave - the - earth company reports the following income statement accounts for the year ended december 31.\nsales discounts $950\noffice salaries expense 4,000\nrent expense - office space 3,500\nadvertising expense 900\nsales returns and allowances 450\noffice supplies expense 900\ncost of goods sold 13,000\nsales 60,000\ninsurance expense 3,000\nsales staff salaries expense 4,500\nprepare a multiple - step income statement for the year ended december 31.
Answer
Explanation:
Step1: Calculate net sales
Net sales = Sales - Sales discounts - Sales returns and allowances Net sales = $60,000 - 950 - 450 = 58,600$
Step2: Calculate gross profit
Gross profit = Net sales - Cost of goods sold Gross profit = $58,600 - 13,000 = 45,600$
Step3: Calculate total selling expenses
Total selling expenses = Advertising expense+Sales staff salaries expense Total selling expenses = $900 + 4,500 = 5,400$
Step4: Calculate total general and administrative expenses
Total general and administrative expenses = Office salaries expense+Rent expense - Office space+Office supplies expense+Insurance expense Total general and administrative expenses = $4,000+3,500 + 900+3,000 = 11,400$
Step5: Calculate total expenses
Total expenses = Total selling expenses+Total general and administrative expenses Total expenses = $5,400+11,400 = 16,800$
Step6: Calculate net income
Net income = Gross profit - Total expenses Net income = $45,600 - 16,800 = 28,800$
Answer:
| Save - the - Earth Company | |
|---|---|
| Income Statement | For Year Ended December 31 |
| Sales | $60,000$ |
| Less: Sales discounts | $950$ |
| Less: Sales returns and allowances | $450$ |
| Net sales | $58,600$ |
| Cost of goods sold | $13,000$ |
| Gross profit | $45,600$ |
| Expenses | |
| Selling expenses | |
| Advertising expense | $900$ |
| Sales staff salaries expense | $4,500$ |
| Total selling expenses | $5,400$ |
| General and administrative expenses | |
| Office salaries expense | $4,000$ |
| Rent expense - Office space | $3,500$ |
| Office supplies expense | $900$ |
| Insurance expense | $3,000$ |
| Total general and administrative expenses | $11,400$ |
| Total expenses | $16,800$ |
| Net income | $28,800$ |