Question

2. Prepare a multiple-step income statement for Armstrong Co. from the following data for the year ended December 31. Sales, $755,000; cost of merchandise sold, $330,000; administrative expenses, $35,000; interest expense, $30,000; rent revenue, $25,000; selling expenses, $50,000.

Answer 1

Explanation:

The preparation of the multiple -step income statement is presented below:

                                                 Armstrong Co.

                                  Multiple -step income statement

                                    For the year ended December 31

Sales                                       $755,000

Less: Cost of goods sold      -$330,000

Gross profit                              $425,000

Less: Operating expenses

Administrative expenses         -$35,000

Selling expenses                      -$50,000

Operating income                     $340,000

Non operating income or others

Interest expense                      -$30,000

Rent revenue                             $25,000

Net income                                $335,000