4 Revenue and Expenses
Income Statement Fundamentals
Jacqueline Gagnon
Remember those two single-step income statements from earlier? Let’s see if we can transform them into multi-step! I’ll walk you through the first one (Simple Co.), and you do the second (Easy Peezy Inc.). Start with a title.
| Simple Co. Income Statement (Multi-Step Format) |
||
|---|---|---|
| (A) Calculate Gross Profit: | ||
| Sales | 1,000 | |
| Cost of Goods Sold | (400) | |
| Gross Profit | 600 | |
| (B) Calculate Operating Income: | ||
| Operating Expenses: | ||
| Freight Expense | (100) | |
| Utilities Expense | (210) | (310) |
| Operating Income | 290 | |
| (C) Peripherals to get to Income Before Taxes | ||
| Other Income/Expenses; Gains and Losses: | ||
| Interest Revenue | 75 | 75 |
| Income Before Income Taxes | 365 | |
| (D) Subtract Income Taxes to get Net Income:In this example, there was no income tax. | ||
| Income Tax Expense | — | |
| Net Income | 365 | |
Now it’s your turn, create a multi-step income statement in good form for Easy Peezy.
Your Turn:4—3: Easy Peezy
Solution:4—3: Solution