Question

P'roblems: 1.(tt points) The adjusted trial balance of Gertz Company included the following accounts, each with a normal balance Advertising Expense Cost of Goods Sold Depreciation Expense Freight-out Income Tax Expense Interest Expense Interest Revenue Merchandise Inventory Prepaid Rent S 15,000 347,000 3,500 2,000 21,700 19,000 25,000 35,750 4,500 575,000 9,500 Sales Discounts Sales Returns and Allowances Store Salaries Expense Unearned Revenue Utilities Expense 74,000 8,000 18,000 Instructions 1.Use the above e information to prepare a multiple-step income statement for the year ended December 31, 2016. to

Answer 1

Gertz Company
Multiple Step Income Statement for the year ended December 31, 2016
Sales	$575,000
Less : Sales Discounts	$7,500
Sales returns and allowances	$50,000
Net Sales		$517,500
Less : Cost of Goods Sold		$347,000
Gross Profit		$170,500
Less : Operating Expenses
Advertising Expense	$15,000
Depreciation Expense	$3,500
Freight-out	$2,000
Utilities Expense	$18,000
Total Operating Expenses		$38,500
Operating profit		$132,000
Less : Non Operating Income/Expense
Interest Revenue	25000
Interest Expense	19000
Net Operating Income		6000
Profit Before Tax		$126,000
Less : Income Tax		$21,700
Net Income		$104,300