Q5-5TI - Horngren'S Financial And Managerial Accounting

Question

Question: Capital City Motorcycle’s selected accounts as of December 31, 2018, follow:

Selling Expenses                                                      $ 10,500 

Interest Revenue                                                            1,000 

Net Sales Revenue                                                     113,500 

Cost of Goods Sold                                                     85,000 

Administrative Expenses                                              8,000

Prepare the multi-step income statement for the year ended December 31, 2018.

Step-by-Step Solution

Answer

The net income of the company is $11,000.

Meaning of Multi-step Income Statement

A multi-step income statement refers to a report that bifurcates the business's operational and non-operational activities. The operating section reports the core events of the company, and the non-operating section captures the secondary events. 

Preparation of multi-step income statement

In the books of Capital City Motorcycle
Multi-step Income Statement
For the year ended December 31, 2018
Particulars	Amounts ($)
Net sales revenue	113,500
Less: Cost of goods sold	(85,000)
Gross profit	28,500
Operating expenses
Less: Selling expenses	(10,500)
Less: Administrative expenses	(8,000)
Income from operations	10,000
Other revenues and gains
Add: Interest revenue	1,000
Net income	11,000