On August 31, 2012, merchandise inventory was $32,684. Supplementary records of merchandising activities for the year ended August 31, 2013, reveal the following itemized costs. Invoice cost of merchandise purchases $ 119,070 Purchase discounts received 2,500 Purchase returns and allowances 5,715 Costs of transportation-in 3,900 3. Prepare a multiple-step income statement that includes separate categories for selling expenses and for general and administrative expenses.

Hi, the question you provided is missing the sales amounts.

However, the important principles for this questions are explained below :

A multiple-step income statement shows separately income derived from Primary Activity of the entity (Operating Income / Loss) and income that includes Secondary Activities of the Company (Net Income / Loss).

Operating Expenses used in determination of Operating Income can be further categorized into Selling, General and Administrative Expenses.

Here is what the multiple-step income statement would look like using the data and information available.

Multiple-step income statement for month ended August 31, 2012

Sales Revenue (information missing)                                              $ ? ? ?

Less Cost of Sales :

Opening Merchandise                                                      $0

Add purchases                                         $ 119,070

Add transport expenses                             $3,900

Less Purchase returns and allowances     ($5,715)     $117,255

Net Purchases                                                               $117,255

Less Closing Merchandise                                           ($32,684)   ($84,571)

Gross Profit                                                                                         $ ? ? ?

Operating Income

Discount Received                                                                           $2,500

Net Income / Loss                                                                              $ ? ? ?

you had the wrong answer