Question

Chocolate Treats has the following account balances:

Cost of goods sold       $400,000       Rent expense       $45,000
Depreciation expense
13,500
Salaries expense
55,000
Insurance expense
3,400
Sales
565,000
Interest expense
10,500
Sales discounts
5,800
Interest revenue
8,900
Sales returns and allowances
16,500

Assuming Chocolate Treats uses a multiple-step income statement, calculate the following: (a) net sales, (b) gross profit, (c) operating expenses, (d) profit from operations, and (e) profit.

Answer 1

Solution:

Choclate Treats
Multtiple step income statement
Particulars		Amount
Sales revenue	$565,000.00
Less: Sales returns and allowances	$16,500.00
Less: Sales discount	$5,800.00
Net sales		$542,700.00
Cost of goods sold		$400,000.00
Gross Profit		$142,700.00
Operating expenses:
Depreciation expense	$13,500.00
Salaries expense	$55,000.00
Insurance expense	$3,400.00
Rent expense	$45,000.00
Total operating expenses		$116,900.00
Net operating income		$25,800.00
Add: Interest revenue		$8,900.00
Less: Interest expense		$10,500.00
Net Income		$24,200.00