Multi-Step Income Statement for ABC&G Inc.

Income Statement Preparation

Overview

  • Purpose: Prepare a multi-step income statement for ABC&G Inc. using provided financial figures.
  • Reporting Period: Year ended December 31, 2021.

Given Financial Data

  • Sales Revenue: $380,000
  • Cost of Goods Sold (COGS): $122,000
  • Operating Expenses:
    • Salaries Expense: $36,000
    • Advertising Expense: $30,000
    • Utilities Expense: $43,000
  • Interest Expense: $13,000
  • Income Tax Expense: Not provided (assumed to be calculated or to remain as a placeholder)

Structure of Multi-Step Income Statement

  1. Sales Revenue: Capture total sales from operations.

    • Sales Revenue = $380,000

  2. Cost of Goods Sold (COGS): Calculate total expenses directly tied to production.

    • COGS = $122,000

  3. Gross Profit Calculation: Subtract COGS from Sales Revenue.

    • Gross Profit = Sales Revenue - COGS
    • Gross Profit=380,000−122,000=258,000Gross \, Profit = 380,000 - 122,000 = 258,000

  4. Operating Expenses: Aggregate all operational costs (excluding interest and taxes).

    • Salaries Expense = $36,000
    • Advertising Expense = $30,000
    • Utilities Expense = $43,000
    • Total Operating Expenses Calculation:
      • Total Operating Expenses = Salaries Expense + Advertising Expense + Utilities Expense
      • Total Operating Expenses=36,000+30,000+43,000=109,000Total \, Operating \, Expenses = 36,000 + 30,000 + 43,000 = 109,000

  5. Income from Operations Calculation: Subtract total operating expenses from gross profit.

    • Income from Operations = Gross Profit - Total Operating Expenses
    • Income from Operations=258,000−109,000=149,000Income \, from \, Operations = 258,000 - 109,000 = 149,000

  6. Income Before Income Taxes Calculation: Subtract interest expense from income from operations.

    • Income Before Taxes = Income from Operations - Interest Expense
    • Income Before Taxes=149,000−13,000=136,000Income \, Before \, Taxes = 149,000 - 13,000 = 136,000

  7. Income Tax Expense: This is given as a separate line and would be subtracted to find the net income. Detailed number not provided but to be incorporated.

  8. Net Income Calculation: This is the final step to determine total profit after taxes. The formula applies:

    • Net Income = Income Before Taxes - Income Tax Expense
    • Placeholder for Income Tax Expense, if provided in future input will finalize the entry.

Summary Structure of the Multi-Step Income Statement for ABC&G Inc.

  • Total Sales Revenue: $380,000
  • Less: Cost of Goods Sold: $122,000
  • Gross Profit: $258,000
  • Less: Total Operating Expenses: $109,000
  • Income from Operations: $149,000
  • Less: Interest Expense: $13,000
  • Income Before Income Taxes: $136,000
  • Less: Income Tax Expense: (to be determined)
  • Net Income: (to be determined)