Use the following information to prepare a multiple-step income statement. The i

Question

Use the following information to prepare a multiple-step income statement.  The income tax rate on all items is 40%. (EPS information is not required.)

Cost of Goods Sold                                                            $4,000

Interest Expense                                                                   1,100

Income (loss) from discontinued Operations                  (1,000)

Selling and administrative Expense                                 1,750

Extraordinary Loss                                                                 (400)

Sales                                                                                      10,000

Dividends                                                                                  700

Loss on sale of discontinued Operations                           (200)

Explanation / Answer

INCOME STATEMENT

SALES =10000

LESS:COST OF GOODS SOLD = 4000

GROSS PROFIT = 6000

LESS:INTEREST EXPENSE = (1100)

LESS:SELLING & ADMINISTRATIVE EXPENSES = (1750)

LESS:-LOSS ON SALE OF DISCONTINUED OPERATIONS = (200)

LESS:EXTRAORINARY LOSS=(400)

NET PROFIT = 2550

LESS:DIVIDEND PAID =(700)

BALANCE TRANSTERRED TO RETAINED EARNINGS = 1850

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