Question

PROBLEM 5-Multiple Income Statement Hoyle Company gathered the following condensed data for the year ended December 31, 2014 wolltepa LEBO Cost of goods sold Sales Sales Retums and Allowances Selling Expenses Administrative Expenses Interest expense Interest revenue Loss on disposal of Equipment $ 650,000 1.325,000 25,000 120,000 100,000 30,000 20.000 200,000 Instructions a) Prepare a multiple-step income statement b) Compute the gross profit rate. Hoyle Company Multiple-Step Income Statement For the year ended December 31, 2014 Gross Profit Rate:

Answer 1

1.

HOYLE COMPANY
Multiple - step Income Statement
For the Year Ended December, 31, 2014
	$	$	$
Sales Revenues
Sales		1,325,000.00
Less: Sales returns and allowances		25,000.00
Net sales		1,300,000.00
Cost of goods sold		650,000.00
Gross Profit			650,000.00
Operating Expenses
Selling Expense		120,000.00
Administrative Expense		100,000.00
Total operating expenses			220,000.00
Income from Operations			430,000.00
Other Income or Expense
Interest revenue		20,000.00
Other expenses and losses
Interest expense	30,000.00
Loss on disposal of equipment	200,000.00	230,000.00	(210,000.00)
Net Income			220,000.00

2. Gross profit rate = (Gross profit / Net sales) x 100

= (650,000 / 1,300,000) x 100

= 50%