Question

The following is a partial Adjusted Trial Balance for Alpha Company for the month:

Alpha Company
Adjusted Trial Balance (partial)
January 31, 2016
Accounts	Debit	Credit
Inventory	$2,750
Sales		$10,000
Sales Discounts	200
Sales Returns & Allowances	1,200
Purchases	4,000
Purchases Discounts		150
Purchase Returns & Allowances		450
Freight In	50
Advertising Expense	150
Depreciation Expense (100% Admin & General)	130
Freight Out	70
Income Tax Expense	500
Salaries Expense	500
Utilities Expense	100

Additionally, Inventory for December 31, 2015 was $2,500. Prepare a multiple-step income statement.

What amount should Alpha Company report on a Multi-Step Income Statement for the following items:

1. Net Sales

2. Cost of Goods Available for Sales

3. Gross Profit

4. General & Administrative Expenses

5. Income before Taxes

Answer 1

Al. Company

Multiple-step income statement

For the year ended 31/12/2015

Heads	Amount, $	Amount, $
Sales:
Gross sales	10,000
Sales returns	(1,200)
Sales discount	(200)
1.Net sales		8,600
Costs:
Gross purchase	4,000
Purchase discount	(150)
Purchase returns	(450)
Net purchase	3,400
Beginning inventory	2,750
Ending inventory	(2,500)
Freight in	50
2. Cost of goods sold		(3,700)
3. Gross profit		4,900
G & A expenses:
Salaries	500
Utilities	100
Advertising	150
Depreciation	130
Freight out	70
4. Total G & A expenses		(950)
5. Income before tax		3,950
Income tax		(500)
Net income		3,450

    

Note: Figures which are to be subtracted given in the brackets.