Questions: Based on the information below create a multiple step income statement for the year ended December 31, 2024 Sales Revenue 2,000 Sales Discount 10,000 Sales Returns and Allowances 130,000 Cost of goods Sold 25,500 Selling Expenses 15,400 General and Administrative Expenses 3,000 Income tax rate is 21%

To create a multiple-step income statement for Smith Company for the year ended December 31, 2024, we will follow these steps:

1. Calculate Net Sales:

   • Sales Revenue: $300,000
   • Less: Sales Discounts: $2,000
   • Less: Sales Returns and Allowances: $10,000
   • Net Sales = Sales Revenue - Sales Discounts - Sales Returns and Allowances
   • Net Sales = $300,000 - $2,000 - $10,000 = $288,000

2. Calculate Gross Profit:

   • Cost of Goods Sold: $130,000
   • Gross Profit = Net Sales - Cost of Goods Sold
   • Gross Profit = $288,000 - $130,000 = $158,000

3. Calculate Operating Income:

   • Selling Expenses: $25,500
   • General and Administrative Expenses: $15,400
   • Total Operating Expenses = Selling Expenses + General and Administrative Expenses
   • Total Operating Expenses = $25,500 + $15,400 = $40,900
   • Operating Income = Gross Profit - Total Operating Expenses
   • Operating Income = $158,000 - $40,900 = $117,100

4. Calculate Other Income and Expenses:

   • Gain on Sale of Asset: $3,000
   • Total Other Income = Gain on Sale of Asset
   • Total Other Income = $3,000

5. Calculate Income Before Tax:

   • Income Before Tax = Operating Income + Total Other Income
   • Income Before Tax = $117,100 + $3,000 = $120,100

6. Calculate Income Tax Expense:

   • Income Tax Rate: 21%
   • Income Tax Expense = Income Before Tax * Income Tax Rate
   • Income Tax Expense = $120,100 * 0.21 = $25,221

7. Calculate Net Income:

   • Net Income = Income Before Tax - Income Tax Expense
   • Net Income = $120,100 - $25,221 = $94,879

Smith Company Income Statement For the Year Ended December 31, 2024

• Net Sales: $288,000

• Cost of Goods Sold: $130,000

• Gross Profit: $158,000

• Operating Expenses:

  • Selling Expenses: $25,500
  • General and Administrative Expenses: $15,400
  • Total Operating Expenses: $40,900

• Operating Income: $117,100

• Other Income:

  • Gain on Sale of Asset: $3,000
  • Total Other Income: $3,000

• Income Before Tax: $120,100

• Income Tax Expense: $25,221

• Net Income: $94,879

This multiple-step income statement provides a detailed breakdown of Smith Company's financial performance for the year ended December 31, 2024.