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From the following accounts, prepare a multi-step income statement for Karlman Distributors for the year ended December 31. Enter all amounts as positive numbers. Selling, general and administrative expense $186,000 Sales revenue 550,000 Cost goods sold 330,000 Income tax expense 10,000 Interest expense 3,000

From the following accounts, prepare a multi-step income statement for Karlman Distributors for the year ended December 31. Enter all amounts as positive numbers. Selling, general and administrative expense $186,000 Sales revenue 550,000 Cost goods sold 330,000 Income tax expense 10,000 Interest expense 3,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Multi-step Income Statement** From the following accounts, prepare a multi-step income statement for Karlman Distributors for the year ended December 31. Enter all amounts as positive numbers. | Account | Amount | |-------------------------------------------|----------| | Selling, general and administrative expense| $186,000 | | Sales revenue | $550,000 | | Cost of goods sold | $330,000 | | Income tax expense | $10,000 | | Interest expense | $3,000 | --- ### Karlman Distributors Income Statement **For the Year Ended December 31** | Description | Amount | |------------------------------------------|-----------| | Sales revenue | $550,000 | | Cost of goods sold | $330,000 | | **Gross profit** | $220,000 | | Selling, general and administrative expenses | $186,000 | | **Income from operations** | $34,000 | | Other income and expense | | | Interest expense | $3,000 | | **Income before income tax** | $31,000 | | Income tax expense | $10,000 | | **Net income** | $21,000 | **Explanation of Diagram:** The diagram represents a multi-step income statement used to calculate the net income for Karlman Distributors. It breaks down the financial data into distinct sections: 1. **Sales Revenue**: Represents the total income from sales ($550,000). 2. **Cost of Goods Sold (COGS)**: The direct costs attributable to the production of the goods sold ($330,000), which is subtracted from sales revenue to determine the Gross Profit. 3. **Gross Profit**: Calculated as Sales Revenue minus COGS ($220,000). 4. **Operating Expenses**: The costs associated with running the business, such as selling, general, and administrative expenses ($186,000) are subtracted from the gross profit to determine the Income from Operations. 5. **Income from Operations**: Calculated as Gross Profit minus Operating Expenses ($34,000). 6. **Other Income and Expenses**: Includes items not directly related to operations, such as interest expense ($3,000), which is deducted from Income from Operations. 7. **Income before Income Tax**: Income from Operations minus Other Expenses ($31,000). 8.
Transcribed Image Text:**Multi-step Income Statement** From the following accounts, prepare a multi-step income statement for Karlman Distributors for the year ended December 31. Enter all amounts as positive numbers. | Account | Amount | |-------------------------------------------|----------| | Selling, general and administrative expense| $186,000 | | Sales revenue | $550,000 | | Cost of goods sold | $330,000 | | Income tax expense | $10,000 | | Interest expense | $3,000 | --- ### Karlman Distributors Income Statement **For the Year Ended December 31** | Description | Amount | |------------------------------------------|-----------| | Sales revenue | $550,000 | | Cost of goods sold | $330,000 | | **Gross profit** | $220,000 | | Selling, general and administrative expenses | $186,000 | | **Income from operations** | $34,000 | | Other income and expense | | | Interest expense | $3,000 | | **Income before income tax** | $31,000 | | Income tax expense | $10,000 | | **Net income** | $21,000 | **Explanation of Diagram:** The diagram represents a multi-step income statement used to calculate the net income for Karlman Distributors. It breaks down the financial data into distinct sections: 1. **Sales Revenue**: Represents the total income from sales ($550,000). 2. **Cost of Goods Sold (COGS)**: The direct costs attributable to the production of the goods sold ($330,000), which is subtracted from sales revenue to determine the Gross Profit. 3. **Gross Profit**: Calculated as Sales Revenue minus COGS ($220,000). 4. **Operating Expenses**: The costs associated with running the business, such as selling, general, and administrative expenses ($186,000) are subtracted from the gross profit to determine the Income from Operations. 5. **Income from Operations**: Calculated as Gross Profit minus Operating Expenses ($34,000). 6. **Other Income and Expenses**: Includes items not directly related to operations, such as interest expense ($3,000), which is deducted from Income from Operations. 7. **Income before Income Tax**: Income from Operations minus Other Expenses ($31,000). 8.
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