The selected accounts from the Blue Door Corporation's accounting records are presented below for the year ended December 31, 2015: Advertising expense $ 55,000 Interest revenue $ 30,000 Common stock 250,000 Inventory 67,000 Cost of goods sold 1,085,000 Rent revenue 24,000 Depreciation expense 125,000 Retained earnings 535,000 Dividends 150,000 Salaries and wages expense 675,000 Freight-out 25,000 Sales discounts 8,500 Income tax expense 70,000 Sales returns and allowances 41,000 Insurance expense 15,000 Sales revenue 2,400,000 Interest expense 70,000 Prepare a multiple-step income statement.

Solution :

Sales Revenue

Sales                                                                                   $ 2,400,000

Less:

Sales discount                                $ 8,500

Sales returns and allowances       $ 41,000

                                                                                             $ 48,500

Net Sales                                                                              $ 2,350,500

Cost of goods sold                                                               $ 1,085,000

Gross profit                                                                            $ 1,265,500

Operating expense :

Salaries expenses                         $ 675,000

Advertising expenses                    $ 55,000

Depreciation expense                  $ 125,000

Freight expense                             $ 25000

Insurance expense                        $ 15,000

Total operating expenses                                                 $ 895,000

Operating income                                                              $ 370,500

Non operating income

Interest revenue                            $ 30,000

Rent revenue                                  $ 24,000

                                                                                           $ 54,000

Non Operating expenses  :

Interest expense                                                                 $ 70,000

Income before income tax                                                 $ 354,500

Income tax expense                                                            $ 70,000

Net income                                                                            $ 284,500

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