Question

AP North Company has completed all of its operating budgets. The sales budget for the year shows 50,000 units and total sales of $2,250,000. The total unit cost of making one unit of sales is $25. Selling and administrative expenses are expected to be $300,000. Interest is estimated to be $10,000. Income taxes are estimated to be $200,000. Prepare a budgeted multiple-step income statement for the year ending December 31, 2020.
Prepare a budgeted income statement for the year.

Answer 1

Answer:

                                   AP North Company

        Income statement for the year ended December 31, 2020

                                                                               Amount in $'000

Sales                                                                                   2,250    

Cost of goods sold                                                             1,250

Gross profit                                                                         1,000  

Operating expenses    

Selling and administrative expenses                                 (300)

Non- Operating or others

Interest expense                                                                    (10)

Net Income/(loss) before income taxes                               690

Income taxes                                                                         (200)

Net Income/(loss) after income taxes                                  490                                                          

Explanation:

A multi-step income statement is one in which the elements of  incomes and expenses are grouped into operating and non-operating heads.

Operating income and expenses are those that are directly related to the ordinary activities of the entity.