Question

The following selected accounts from the Wildhorse Co.’s general ledger are presented below for the year ended December 31, 2022:

Advertising expense		$ 59,000		Interest revenue		$ 36,000
Common stock		254,000		Inventory		71,000
Cost of goods sold		1,089,000		Rent revenue		24,000
Depreciation expense		129,000		Retained earnings		539,000
Dividends		154,000		Salaries and wages expense		678,000
Freight-out		29,000		Sales discounts		9,000
Income tax expense		74,000		Sales returns and allowances		47,000
Insurance expense		15,000		Sales revenue		2,403,000
Interest expense		73,000

Prepare a multiple-step income statement.

Wildhorse Co.
Income Statement

Answer 1

Multiple step income statement

Sales revenue		2403000
Less: Sales return and allowance	-47000
Less: Sales discount	-9000	-56000
Net Sales		2347000
Cost of goods sold		1089000
Gross profit		1258000
Less: Operating expense
Advertising expense	-59000
Depreciation expense	-129000
Freight out	-29000
Insurance expense	-15000
Salaries and wages expense	-678000
Total operating expense		-910000
Operating income		348000
Interest revenue	36000
Rent revenue	24000
Interest expense	-73000	-13000
Income before tax		335000
Income tax		74000
Net income		261000