Question

The following information is related to Splish Company for 2020.

Answer 1

Answer:

Net income is $2,034,560.

Explanation:

The multiple-step income statement refers to an income statement that segregates operating revenues and operating expenses of an organisation from its nonoperating revenues, nonoperating expenses, gains, and losses. In addition, gross profit which is net sales revenue minus the cost of goods sold.

The multiple-step income statement is an alternative to the single-step income statement which reports uses just one equation to calculate profits by deducting total revenue from total expenses from segregating them.

The multiple step income statement of Splish Company for 2020 will look as follows:

Splish Company

Income Statement

For the Year Ended December 31, 2020

Particulars                                                     $                         $              

Sales Revenue                                                                 34,000,000

Cost of goods sold                                                          (21,760,000)

Gross profit                                                                       12,240,000

Selling and administrative expenses                              (6,392,000)

Income from operation                                                     5,848,000

Other revenues and gains

Interest revenue                                        95,200

Gain on the sale of investments             149,600  

Total other revenues and gains                                         244,800  

                                                                                           6,092,800

Other expenses and losses

Write-off of goodwill                               (1,115,200)

Loss due to flood damage                     (530,400)  

Total other expenses and losses                                     (1,645,600)

Income from continuing op. b4 tax                                4,447,200

Income taxes                                                                     (1,691,840)  

Income from continuing operation                                 2,755,360

Discontinued operation

Loss on disposal (net of tax)                  (598,400)

Loss on operations (net of tax)              (122,400)  

                                                                                            (720,800)  

Net income                                                                        2,034,560