Question

Question No: 2 (15 minutes)

Notson Company gathered the following condensed data for the year ended December 31, 2017:

Accounts	Balance
Sales	$560,000
Sales Returns and Allowances	20,000
Sales Discounts	7,000
Cost of Goods Sold	386,000
Freight-out	2,000
Advertising Expense	15,000
Interest Expense	18,000
Store Salaries Expense	55,000
Utilities Expense	28,000
Depreciation Expense	7,000
Interest Revenue	30,000

Required:

Use the above information to prepare a multiple-step income statement for the year ended December 31, 2017.

Answer 1

Notson Company
Multiple-step income statement for the year ended December 31, 2017
Particulars	Amount in $	Amount in $
Net Sales		5,33,000
Gross sales	5,60,000
- ( sales returns and allowances )	-20,000
- ( Sales discounts )	-7,000
Cost of goods sold ( includes Freight out )		3,88,000
Gross profit		1,45,000
Operating expenses:
Selling expenses		15,000
Administrative expenses		90,000
utilities expenses	28,000
Depreciation and amortization	7,000
Store salaries expenses	55,000
Total operating expenses		1,05,000
Operating income		40,000
Non operating income :
Interest and other (income) expense:
Interest and investment income		30,000
Interest expense		18,000
Net interest income		12,000
Total Net Income		52,000