Question

Not yet answered Marked out of 1.00 Flag question The accounting records of Slattery Corporation, a small manufacturing company, show the following balances for the fiscal year ending December 31, 2019: Sales revenue $3,425,000 Selling expense $782,000 Research and development 96,400 Gain on sale of bonds 20,300 Interest income 18,400 Cost of goods sold 1,611,000 Restructuring costs 112,000 General and administrative expense 585,700 Interest expense 32,000
The restructuring costs were incurred as a result of one-time changes in raw materials management. Slattery prepares multiple-step income statements. Use 25% as the tax rate.
Slattery Corporation's Net income for 2019 equals_______.
Select one:
a. $267,450
b. $334,725
c. $262,425
d. $183,450
e. $244,600

Answer 1

Answer:

The correct option is d. $183,450.

Explanation:

The multiple-step income statement can be described as an income statement that shows gross profit which is net sales revenue minus the cost of goods sold, and separates an organization's operating revenues and operating expenses from its nonoperating revenues, nonoperating expenses, gains, and losses.

The multiple-step income statement is different from a single-step income statement which only employs just one equation to determine profits by simply deducting total revenue from total expenses.

Slattery Corporation's Net income for 2019 can be determined by preparing its Multi-Step Income Statement for 2019 as follows:

Slattery Corporation

Multi-Step Income Statement

For the Year Ended December 31, 2019

Particulars                                                         $                      $        

Sales revenue                                        3,425,000

Cost of goods sold                                 (1,611,000)

Gross profit                                                                       1,814,000

Operating expenses:

Selling expense                                      (782,000)

General and administrative expense    (585,700)

Total operating expenses                                              (1,367,700)

Operating income                                                            446,300

Other expenses and income:

Research and development                   (96,400)

Gain on sale of bonds                               20,300

Interest income                                          18,400

Restructuring costs                                 (112,000)

Interest expense                                      (32,000)  

Total other expenses and income                                 (201,700)  

Income before tax                                                            244,600

Tax (Tax rate *  Income before tax)                                    61,150  

Net income                                                                        183,450  

Therefore, the correct option is d. $183,450.