Shown below is an income statement prepared by a poorly trained bookkeeper. Assume an income tax...

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Question

Shown below is an income statement prepared by a poorly trained bookkeeper. Assume an income tax...

Shown below is an income statement prepared by a poorly trained bookkeeper.

Assume an income tax rate of 30% on all items. Ignore EPS.

ABC Company Income Statement December 31, 20x1

Sales Revenue	$1,192,375
Investment Revenue	9,250
Cost of goods sold	(340,375)
Selling + Administrative	(563,250)
Interest expenses	(13,000)
Loss on Building (Fire Damage)	(80,000)
Loss on disposal of business segment	(32,500)

NI	120,750

Prepare the template for a single-step income statement in good form. Then answer the questions pertaining to the statement.

ABC Company
Income Statement
December 31, 20x1
Revenue:
Sales Revenue
Investment Revenue
Total Revenue
Expenses:
Cost of Goods Sold
Selling and Administrative Expenses
Interest Expenses
Loss on building (Fire Damage)
Total Expenses
Income from Continuing Operations before Tax
Income Taxes
Income from Continuing Operations
Discontinued Operations:
Loss on Disposal of Business Segment (net of tax of $12,000)
NI

Question 18 options:

123456789	What is Gross Profit/Margin?
123456789	What is the amount of “Net Income” and does it differ among the single and multi-step format?
123456789	What is Total Expenses?
123456789	What is Total Revenue?
123456789	What is the amount reported for “Discontinued Operations” and does the presentation differ among the single and multi-step format?

1.	$836,625
2.	$852,000
3.	$1,201,625
4.	It is not displayed.
5.	Loss of $22,750 and yes, it differs.
6.	Loss of $22,750 and no it does not differ.
7.	$120,750 and yes, it differs.
8.	$120,750 and no it does not differ.
9.	Cannot be determined

business accounting

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Answer 1

Answer #1

ABC Company
Income Statement
Particulars	Amount	Amount
Revenue	1192375
Investment income	9250
Total revenue		1201625
Less: Expenses
Cost of goods sold	340375
Selling & admin expenses	563250
Interest expenses	13000
Loss on building (fire)	80000
Total expenses		996625
Profit from continuing operations		205000
Loss on disposal of business segment		-32500
Net income		172500

1. Gross Margin= Gross Profit/Net sales
Gross profit= Revenue-COGS= 1192375-340375= $852000
Net revenue= 1192375
Gross margin= 852000/1192375= 71.45%

2.The amount of net income is $ 172500.
It does not differ with preparation of single or multi step income statement
It is only the format of presenting the income statement

3. Total expenses= 996625+32500= $109125

4. Total revenue= Revenue+investment income= $1201625

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Answer 2

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