Question

Fit-for-Life Foods reports the following income statement accounts for the year ended December 31

Answer 1

Answer:

Fit-for-Life Foods

Multiple-step income statement, for the year ended December 31

Sales                                                                            220,000

Less Sales returns and allowances                              (4,000)

Net Revenue                                                                216,000

Less Cost of goods sold                                             (90,000)

Gross Profit                                                                  126,000

Less Operating Expenses :

General and Administrative Expenses

Gain on sale of equipment                ( 6,250)

Office supplies expense                         700

Depreciation expense—Office copier   500

Insurance expense                                1,300

Office salaries expense                      32,500            (28,750)

Selling and Distribution Expenses

TV advertising expense                       2,000

Sales discounts                                    16,000

Sales commission expense                13,000

Sales staff wages                                23,000

Rent expense—Selling space             10,000           (64,000)

Operating  Income / (Loss)                                          33,250

Less Non - Operating Expenses

Interest revenue                                                               750

Net Income / (Loss)                                                      34,000

Explanation:

A multiple-step income statement shows separately profit generated from Primary Activities of the Company (Operating Profit) and profits that included Secondary Activities of the Company (Net Profit)