QUESTION 4. The following information is available for Skysong Corp. for the year ended December 31, 2022.
Other revenues and gains: $23,400
Other expenses and losses: $3,900
Costs of goods sold: $290,000
Sale discounts: $4,800
Sales revenue: $758,000
Operating expenses: $219,000
Sales returns and allowances: $10,500
Prepare a multiple-step income statement for Skysong Corp. The company has a tax rate of 25%. Use the following terms: Gross Profit, Income before Income Taxes, Income From Operations, Net Income/(Loss), Net Sales, Operating Expenses, Other Expenses and Losses, Other Revenues and Gains, Sales
Answer (1)
To create a multiple-step income statement for Skysong Corp., we will follow these steps:
Calculate Net Sales :
Net Sales = Sales Revenue - Sales Returns and Allowances - Sales Discounts
Net Sales = 758 , 000 − 10 , 500 − 4 , 800 = 742 , 700
Calculate Gross Profit :
Gross Profit = Net Sales - Cost of Goods Sold
Gross Profit = 742 , 700 − 290 , 000 = 452 , 700
Calculate Income From Operations :
Income from Operations = Gross Profit - Operating Expenses
Income from Operations = 452 , 700 − 219 , 000 = 233 , 700
Calculate Income before Income Taxes :
Income before Income Taxes = Income from Operations + Other Revenues and Gains - Other Expenses and Losses
Income before Income Taxes = 233 , 700 + 23 , 400 − 3 , 900 = 253 , 200
Calculate Net Income :
Net Income = Income before Income Taxes - Income Tax Expense
Income Tax Expense = Income before Income Taxes * Tax Rate
Income Tax Expense = 253 , 200 × 0.25 = 63 , 300
Net Income = 253 , 200 − 63 , 300 = 189 , 900
Therefore, the multiple-step income statement for Skysong Corp. for the year ended December 31, 2022, is as follows:
Sales Revenue 758,000 Less: Sales Returns and Allowances 10,500 Less: Sales Discounts 4,800 Net Sales 742,700
Cost of Goods Sold 290,000 Gross Profit 452,700
Operating Expenses 219,000 Income from Operations 233,700
Other Revenues and Gains 23,400 Other Expenses and Losses 3,900 Income before Income Taxes 253,200
Income Tax Expense 63,300 Net Income 189,900
This multiple-step income statement gives a clear view of Skysong Corp.'s financial performance by breaking down the revenues, costs, operating expenses, and net income for the fiscal year.
