Question

18. Based on the following account information, prepare a multi step statement of income.

Cash: $50,000

Accrued expenses: $5,000

Accounts receivable: $70,000

Bad debt expense: $1,000

General and administrative expenses: $100,000

Net Sales: $900,000

Costs of goods sold: $200,000

Selling expenses: $90,000

Income tax expense: $3,000

Interest expense: $5,000

Interest receivable: $5,000

Retained earnings: $80,000

Accumulated depreciation: $5,000

Depreciation expense: $1,000

Earnings per share: $100

Common stock: $50,000

Answer 1

Multi-step statement of income

Particulars	$
Net sales	9,00,000
Less; Cost of goods sold	(2,00,000)
Gross profit	7,00,000
Less: General and administration expense	(1,00,000)
Selling expenses	(90,000)
Interest expenses	(5,000)
Depreciation expense	(1,000)
Bad debt expenses	(1,000)
Profit before tax expense	5,03,000
Less Tax expenses	(3,000)
Profit after tax(a)	5,00,000
No of common stock (b)	5,000
EPS (a) /(b)	$100

The following are Balance sheet items, and hence not considered in the statement of income :

1. Cash.[asset]
2. Accrued expenses [liability]
1. Accounts receivable.[asset]
2. Interest receivable.[asset]
3. Retained earnings [owners’ equity]
4. Accumulated depreciation [to be deducted from fixed assets in balance sheet]
5. Common stock[ owners’ equity]
6. EPS will not affect