The following is a partial Adjusted Trial Balance for Alpha

The following is a partial Adjusted Trial Balance for Alpha Company for the month:

Alpha Company

Adjusted Trial Balance (partial)

January 31, 2016

Accounts

Debit

Credit

Inventory

$2,750

Sales

$10,000

Sales Discounts

200

Sales Returns & Allowances

1,200

Purchases

4,000

Purchases Discounts

150

Purchase Returns & Allowances

450

Freight In

50

Advertising Expense

150

Depreciation Expense (100% Admin & General)

130

Freight Out

70

Income Tax Expense

500

Salaries Expense

500

Utilities Expense

100

Additionally, Inventory for December 31, 2015 was $2,500. Prepare a multiple-step income statement.

What amount should Alpha Company report on a Multi-Step Income Statement for the following items:

1. Net Sales

2. Cost of Goods Available for Sales

3. Gross Profit

4. General & Administrative Expenses

5. Income before Taxes

Alpha Company
Adjusted Trial Balance (partial)
January 31, 2016
Accounts	Debit	Credit
Inventory	$2,750
Sales		$10,000
Sales Discounts	200
Sales Returns & Allowances	1,200
Purchases	4,000
Purchases Discounts		150
Purchase Returns & Allowances		450
Freight In	50
Advertising Expense	150
Depreciation Expense (100% Admin & General)	130
Freight Out	70
Income Tax Expense	500
Salaries Expense	500
Utilities Expense	100

Solution

Al. Company

Multiple-step income statement

For the year ended 31/12/2015

Heads

Amount, $

Amount, $

Sales:

Gross sales

10,000

Sales returns

(1,200)

Sales discount

(200)

1.Net sales

8,600

Costs:

Gross purchase

4,000

Purchase discount

(150)

Purchase returns

(450)

Net purchase

3,400

Beginning inventory

2,750

Ending inventory

(2,500)

Freight in

50

2. Cost of goods sold

(3,700)

3. Gross profit

4,900

G & A expenses:

Salaries

500

Utilities

100

Advertising

150

Depreciation

130

Freight out

70

4. Total G & A expenses

(950)

5. Income before tax

3,950

Income tax

(500)

Net income

3,450

    

Note: Figures which are to be subtracted given in the brackets.

Heads	Amount, $	Amount, $
Sales:
Gross sales	10,000
Sales returns	(1,200)
Sales discount	(200)
1.Net sales		8,600
Costs:
Gross purchase	4,000
Purchase discount	(150)
Purchase returns	(450)
Net purchase	3,400
Beginning inventory	2,750
Ending inventory	(2,500)
Freight in	50
2. Cost of goods sold		(3,700)
3. Gross profit		4,900
G & A expenses:
Salaries	500
Utilities	100
Advertising	150
Depreciation	130
Freight out	70
4. Total G & A expenses		(950)
5. Income before tax		3,950
Income tax		(500)
Net income		3,450