Concept explainers
Concept Introduction:
Income Statement:
The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business. It can be single step income statement as well multi step income statement.
To prepare:
Multi step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses

Answer to Problem 15E
Fit-For-Life Food | ||
Income Statement | ||
For the year Ended December 31, 201X | ||
Revenues | ||
Sales | 2,20,000 | |
Less: | ||
Sales returns and allowances | 4,000 | |
Sales discounts | 16,000 | 20,000 |
Net Sales | 2,00,000 | |
Cost of Goods sold | 90,000 | |
Gross Profit | 1,10,000 | |
Expenses | ||
Selling expenses | ||
Sales Staff Wages | 23,000 | |
Rent Expense - Selling space | 10,000 | |
TV Advertising Expense | 2,000 | |
Sales Commission Expense | 13,000 | |
Total Selling Expense | 48,000 | |
General and Administrative Expense | ||
Office Supplies Expense | 700 | |
Insurance Expense | 1,300 | |
Office Salaries Expense | 32,500 | |
500 | ||
Total General and Administrative Expense | 35000 | |
Total Expense | 83,000 | |
Net Operating Income | 27,000 | |
Other Revenues, Gains, Expenses and Losses | ||
Gain on Sale of Equipment | 6,250 | |
Interest Revenue | 750 | |
Total other Revenues, Gains, Expenses and Losses | 7,000 | |
Net Income | 34,000 |
The above income statement is prepared as under −
Given,
- Sales = $ 220,000
- Sales discounts = $ 4,000
- Sales returns and allowances = $ 16,000
- Cost of goods sold = $ 90,000
- Sales Staff Wages = $ 23,000
- Rent Expense - Selling space = $ 10,000
- TV Advertising Expense = $ 2,000
- Sales Commission Expense = $ 13,000
- Office Supplies Expense = $ 700
- Insurance Expense = $ 1,300
- Office Salaries Expense = $ 32,500
- Depreciation Expense - Office Copier = $ 500
- Gain on Sale of Equipment = $ 6,250
- Interest Revenue = $ 750
Explanation of Solution
The above income statement is prepared as under −
Given,
- Sales = $ 220,000
- Sales discounts = $ 4,000
- Sales returns and allowances = $ 16,000
- Cost of goods sold = $ 90,000
- Sales Staff Wages = $ 23,000
- Rent Expense - Selling space = $ 10,000
- TV Advertising Expense = $ 2,000
- Sales Commission Expense = $ 13,000
- Office Supplies Expense = $ 700
- Insurance Expense = $ 1,300
- Office Salaries Expense = $ 32,500
- Depreciation Expense - Office Copier = $ 500
- Gain on Sale of Equipment = $ 6,250
- Interest Revenue = $ 750
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Chapter 5 Solutions
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