Question

Presented below is information for Wildhorse Co. for the month of January 2017 Cost of goods sold Freight-out Insurance expense Salaries and wages expense Income tax expense $208,700 Rent expense 9,200 Sales discounts 12,700 Sales returns and allowances 60,700 Sales revenue $33,800 8,400 18,500 396,000 5,500 Other comprehensive income (net of $400 tax) 2,000 Prepare an income statement using the multi-step format.

Answer 1

Answer and Explanation:

The Preparation of income statement using the multi-step format is prepared below:-

                                              Wildhorse Co.

                                          Income statement

                              using the multi-step format

Particulars                                      Amount

Sales                                                 $396,000

Less: Sales discount    $8,400

Less: Sales and return

allowances                    $18,500      $26,900

Net sales                                           $369,100

Less: Cost of goods sold                 $208,700

Gross profit                                        $160,400

Operating expenses

Freight out expenses    $9,200

Insurance expenses      $12,700

Salaries and wages

expenses                        $60,700

Rent expenses                $33,800

Total operating expenses                   $116,400

Income before income taxes              $44,000

Income tax expenses                           $5,500

Net income                                            $38,500

So, to reach at net income we simply deduct the income tax expenses from income before income taxes.