Question

The adjusted trial balance of Pacific Scientific Corporation on December 31, 2021, the end of the company's fiscal year, contained the following income statement items ($ in millions): sales revenue, $2,185, cost of goods sold, $1.410; selling expense, $200, general and administrative expense, $190; interest expense, $60; and gain on sale of investments, $155. Income tax expense has not yet been recorded. The income tax rate is 25%. Prepare a multiple-step income statement for 2021. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (ie., 10,000,000 should be entered as 10).) PACIFIC SCIENTIFIC CORPORATION Income Statement For the Year Ended December 31, 2021 Gross profit Operating expenses Total operating expenses Operating income Other income (expense): Total other income, net Income before income taxes Net income

Answer 1

Multi-step income statement depicts the income and expenses in step-wise manner. The revenues are shown first and expenses forming administrative, selling expenses and cost of goods sold are shown in sequential manner with breakup wise details.

Pacific scientific corporation

Income Statement

For the Year ended December 31,2021\

Particulars	Amount ($)	Amount ($)
Sales revenue		2185
Less: cost of goods sold		-1410
Gross profit		775
Operating expenses
Selling expense	200
Administrative expense	190
Total operating expense		-390
Operating income		385
Other income (expense)
Interest expense	-60
Gain on sale of investment	155
Total other income net		95
Income before income taxes		480
Income taxes at 25%		120
Net income		$ 360