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.
