Question

The adjusted trial balance of Pacific Scientific Corporation on December 31, 2021, the end of the company’s fiscal year, contained the following income statement items ($ in millions): sales revenue, $2,135; cost of goods sold, $1,310; selling expense, $150; general and administrative expense, $140; interest expense, $65; and gain on sale of investments, $90. Income tax expense has not yet been recorded. The income tax rate is 25%. Assume the company’s accountant prepared a multiple-step income statement.

a. What amount would appear in that statement for operating income?
b. What amount would appear in that statement for nonoperating income?

Answer 1

Scientific Corporation
Income Statement for the year Ended Dec 31 2021
Particulars	Amount	Amount
Sales		2135
Less: Cost of Goods Sold		1310
Gross Profit		825
Less:Operating Expenses
Selling Expenses	($150)
General & Administrative Expense	($140)
Total Operating Expenses		($290)
Operating Income		$535
Non Operating Expenses & Income
Interest Expenses	($65)
Gain on sale of Investment	$90
Income tax expense	($140)
Total Non Operating Expenses		($115)
Net Income		$420