

Study with the several resources on Docsity
Earn points by helping other students or get them with a premium plan
Prepare for your exams
Study with the several resources on Docsity
Earn points to download
Earn points by helping other students or get them with a premium plan
Community
Ask the community for help and clear up your study doubts
Discover the best universities in your country according to Docsity users
Free resources
Download our free guides on studying techniques, anxiety management strategies, and thesis advice from Docsity tutors
When doing a multiple step income statement, one must remember the key elements. They are: Net Sales, Cost of Goods Sold, Gross Profit, Total Operating.
Typology: Slides
1 / 2
This page cannot be seen from the preview
Don't miss anything!
This instructional aid was prepared by the Tallahassee Community College Learning Commons.
The adjusted trial Balance for the Year ended December 3 1, 20 10, For ELM Company is shown below: ELM Company Adjusted Trial Balance For the Year ended December 3 1, 2010 Items Dr Cr Cash (^14) , (^500) blank Accounts Receivable (^11) , (^100) blank Merchandise Inventory (^29) , (^000) blank Prepaid Insurance (^) 2, (^500) blank Store Equipment (^95) , (^000) blank Accumulated Depreciation (^) blank 18 , 000 Notes Payable (^) blank 25 , 000 Accounts Payable (^) blank 10 , 600 Common Stock (^) blank 70 , 000 Retained Earnings (^) blank 11 , 000 Dividends (^12) , (^000) blank Sales (^) blank 53 6, 800 Sales Returns and Allowances (^) 6, (^700) blank Sales Discounts (^) 5, (^000) blank Cost of Goods Sold (^36) 3, (^400) blank Freight-Out (^) 7, (^600) blank Advertising Expense (^12) , (^000) blank Store Salaries Expense (^56) , (^000) blank Utilities Expense (^18) , (^000) blank Rent Expense (^24) , (^000) blank Depreciation Expense (^) 9, (^000) blank Insurance Expense (^) 4, (^500) blank Interest Expense (^) 3, (^600) blank Interest Revenue (^) blank 2, 500 Total (^673) , 900 673 , 900 Instructions: Given this data, prepare a multiple-Step Income statement for ELM Company, assuming a tax rate of 30 %. What to do: Remember to always label your Income statements with the company name, Income statement and for period ending. When doing a multiple step income statement, one must remember the key elements. They are: Net Sales, Cost of Goods Sold, Gross Profit, Total Operating Expenses, net gain/loss from other activities, Income before taxes, Income tax expense, and Net Income. These items will be listed on the right hand column of the income statement, and help us understand which accounts we use in what order.
This instructional aid was prepared by the Tallahassee Community College Learning Commons. First, we start by determining Net Sales. This is done by taking sales and subtracting sales returns and allowances and sales discounts. Then, we subtract Cost of Goods Sold from Net Sales to determine Gross Profit. Next, we total our operating expenses (which are expenses related to operating the business), and subtract them from our Gross Profit to find our Operating Income. Then, we add any other revenues/gains and subtract any other expenses/losses. This gives us our income by taxes. Multiplying this number by the tax rate gives us our Income tax expense, which when we subtract the two gives us our Net Income, the end goal.
ELM Company For the Year ended December 3 1, 2010