Sellall Department Stores reported the following amounts in its adjusted trial balance prepared as of its December 31 year-end: Administrative Expenses, $2,600; Cost of Goods Sold, $23,760; Income Tax Expense, $3,170; Interest Expense, $1,600; Interest Revenue, $200; General Expenses, $2,800; Sales Revenue, $44,000; Sales Discounts, $2,200; Sales Returns and Allowances, $1,980; and Delivery (freight-out) Expense, $320. Prepare a multistep income statement for distribution to external financial statement users.

Sellall Department Stores

Multi-step income statement

for the year end December 31,

Sales Revenue,                                     $44,000

Add: Interest Revenue,                         $200

Less: Sales Discounts,                          $2,200

Less: Sales Returns and Allowances,  $1,980

Net Revenue                                                           $40,020

Less: Cost of Goods Sold,                                      $23,760

Gross Income                                                           $16,260

Less: Operating Expenses

Administrative Expenses,         $2,600

General Expenses,                    $2,800

Delivery (freight-out) Expense, $320  

                                                                                 $5,720    

Operating Income                                                    $10,540

Less: Interest Expense,                                            $1,600

Income before tax                                                    $8,940

Less: Income Tax Expense,                                     $3,170

Net Income                                                               $5,770

Explanation:

Multi-step Income statement segregate the Operating Income and Expenses from non operating Income and Expense. It shows the gross profit and net operating income separately.