Question

The following income statement was prepared by an office clerk hired for July. As the accounting supervisor, you recognize that it is incorrect and prepare a corrected multi-step income statement. Demo Sales Income Statement For Month Ended July 31, 2017 Sales $ 564,140 Accounts receivable 38,000 Unearned sales 18,400 Net sales $ 620,540 Operating expenses: Accumulated depreciation, equipment $ 31,000 Advertising expense 14,400 Cost of goods sold 398,000 Depreciation expense, equipment 3,400 Insurance expense 2,700 Interest expense 2,100 Interest payable 350 Jen Conway, withdrawals 14,200 Office supplies 11,000 Prepaid insurance 18,000 Prepaid rent 26,000 Rent expense 6,200 Salaries payable 175,200 Sales discounts 3,200 705,750 Loss $ 85,210

Answer 1

A corrected multi-step income statement
Income statement
For the month ended July 31,2017
Sales (net of sales discount)		$560,940.00
Less : Cost of goods sold		$398,000.00
Gross Margin		$162,940.00
Less : Operating Expenses
Advertising expense	$14,400.00
Depreciation Expense	$3,400.00
Insurance Expense	$2,700.00
Rent Expense	$6,200.00
Total Operating Expenses		$26,700.00
Net operating Income		$136,240.00
Less : Interest Expense		$2,100.00
Net income		$134,140.00