The adjusted trial balance of Pacific Scientific Corporation on December 31, 201

Question

The adjusted trial balance of Pacific Scientific Corporation on December 31, 2016, the end of the company’s fiscal year, contained the following income statement items ($ in millions): sales revenue, $2,150; cost of goods sold, $1,340; selling expenses, $165; general and administrative expenses, $155; interest expense, $30; and gain on sale of investments, $70. Income tax expense has not yet been accrued. The income tax rate is 30%. Assume the company’s accountant prepared a multiple-step income statement.

What amount would appear in that statement for operating income? Ignore EPS disclosures. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

What amount would appear in that statement for nonoperating income? Ignore EPS disclosures. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

What amount would appear in that statement for operating income? Ignore EPS disclosures. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Explanation / Answer

a) Particulars Amount Amount Sales revenue 2150 Less: Cost of Goods sold 1340 Gross profit 810 Less: operating Expenses Selling Expenses 165 General and administrative expenses 155 Total Operating Expenses 320 Operating income 490 Therefore operating income is $490 b) Gain on sale of the investments 70 less: interest expense -30 Non operating income 40 2) Multi step Income statement Particulars Amount Amount Sales revenue: Sales revenue: 2150 Less: Sales returns and allowances 0 Sales discounts 0 2150 Less:Cost of goods sold 1340 Gross profit 810 Less: Operating Expenses General and administrative expenses 155 Selling expenses 165 320 Income from operations 490 Add: Other revenue and gains Gain on sale of investments 70 Less: other expenses and losses -30 40 Income before income tax and extraordinary income 450 Less : Income tax Expenses 135 Income before extraordinary income 315 less: extraordinary items 0 net income 315

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