34_E - Horngren'S Financial And Managerial Accounting

Question

Preparing a multi-step income statement

Clix Photographic Supplies, Inc.’s accounting records include the following for 2018:

Income Tax Savings—Loss on 

Discontinued Operations

\( 12,000 Net Sales \) 525,000

Operating Expenses 

(Including Income Tax)

100,000

Loss on Discontinued Operations 30,000

Cost of Goods Sold 240,000

Prepare Clix’s multi-step income statement for the year ending December 31, 2018. Omit earnings per share.

Step-by-Step Solution

Answer

Net income of the company is $143,000 at the year ending on December 31, 2018.

Step 1: Basic Introduction

Income statement is a financial statement that helps stakeholders in analysing the financial performance of a corporation. It includes all the revenue and expenses of a corporation and determines the net income or net loss st the end of the financial year.

Step 2: Multi- step Income Statement

Income Statement                                                                       Dec 31, 2018
Net Sales	$525,000
Cost of Goods Sold	($240,000)
Gross profit	$285,000
Less: Operating Expenses	($100,000)
Income continued operations	$185,000
Less: Income Tax Savings—Loss on Discontinued Operations	($12,000)
Less: Loss on Discontinued Operations	($30,000)
Net Income	$143,000