Question

Save-the-Earth Co. reports the following income statement accounts for the year ended December 31.

Sales discounts	$	800
Office salaries expense		2,500
Rent expense—Office space		2,000
Advertising expense		600
Sales returns and allowances		300
Office supplies expense		600
Cost of goods sold		10,000
Sales		30,000
Insurance expense		1,500
Sales staff salaries		3,000

Required:
Prepare a multiple-step income statement for the year ended December 31.

Answer 1

Save The Earth
Income Statement
December 31,
Revenues
Sales revenue		30,000
Less:
Sales return and allowance	-300
Sales discount	-800
		-1,100
Net Sales		28,900
Cost of goods sold		-10,000
Gross profit		18,900
Operating expenses:
Office salaries expense	-2,500
Rent expense—Office space	-2,000
Advertising expense	-600
Office supplies expense	-600
Insurance expense	-1,500
Sales staff salaries	-3,000
Total Operating expenses		-10,200
Operating Income		$8,700

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