Question

The adjusted trial balance of Pacific Scientific Corporation on December 31, 2018, the end of the company’s fiscal year, contained the following income statement items ($ in millions): sales revenue, $2,106; cost of goods sold, $1,240; selling expenses, $126; general and administrative expenses, $105; interest expense, $35; and gain on sale of investments, $45. Income tax expense has not yet been recorded. The income tax rate is 40%. Assume the company’s accountant prepared a multiple-step income statement.

Answer 1

Answer:

2018 Multi Step - Income Statement

$ 2.106,000 Sales

$ 2.106,000 Net Sales Revenues

-$ 1.240,000 Cost of goods sold

$ 866,000 Gross PROFIT

-$ 105,000 General and administrative expenses

-$ 126,000 Selling expenses

-$ 231,000 Operating Expenses

$ 635,000 INCOME FROM OPERATIONS

$ 35,000 Gain on sale of investments

$ 35,000 Other Revenues and Gains:

-$ 105,000 Interest Expenses

-$ 105,000 Other expenses and Loss

$ 565,000 NET INCOME AFTER TAXES

-$ 226,000 Income Tax Expenses

$ 339,000 Net INCOME

Explanation:

In the Multistep income it's possible to segregate the operative expenses and revenues of the non operative, it also shows the gross profit, which is  

the Net Sales Revenues less the Cost of Goods Sold.  

First it's shown the Gross Profit, then substracted the operating expenses  

to arrive at operating income.  

Finally with the non operating movements we have the net Income After Taxes and with the taxes expenses we have the Net Income of the company.