Appendix I
Review Exercise Solutions
410
b) Prepare a multistep income statement
George’s Gardening Supplies
Income Statement
For the Year Ended December 31, 2016
Sales Revenue
$113,500
Less:
Sales Returns and Allowances
$1,000
Sales Discounts
1,580
(2,580)
Net Sales
110,920
Cost of Goods Sold
44,700
Gross Profit
66,220
Operating Expenses
Depreciation Expense
5,000
Insurance Expense
2,500
Rent Expense
6,000
Salaries Expense
11,000
Supplies Expense
4,500
Utilities Expense
750
Total Operating Expenses
29,750
Operating Income
36,470
Other Revenue and Expenses
Interest Revenue
6,500
Interest Expense
(2,600)
3,900
Net Income
$40,370
Gross Profit Margin = 66,220 ÷ 110,920 = 60%
