Interest expense would be classified on a multiple-step income statement under the heading
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Other revenues and gains.
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Operating expenses.
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Other expenses and losses.
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Cost of goods sold.
Interest expense would be classified on a multiple-step income statement under the heading
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Other revenues and gains.
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Operating expenses.
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Other expenses and losses.
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Cost of goods sold.
Related questions
The following incorrect income statement was prepared by the accountant of the Axel Corporation:
| AXEL CORPORATION Income Statement For the Year Ended December 31, 2018 | |||||
| Revenues and gains: | |||||
| Sales | $ | 690,000 | |||
| Interest and dividends | 42,000 | ||||
| Gain on sale of investments | 89,000 | ||||
| Total revenues and gains | 821,000 | ||||
| Expenses and losses: | |||||
| Cost of goods sold | $ | 375,000 | |||
| Selling expenses | 69,000 | ||||
| Administrative expenses | 89,000 | ||||
| Interest | 36,000 | ||||
| Restructuring costs | 65,000 | ||||
| Income taxes | 74,800 | ||||
| Total expenses and losses | 708,800 | ||||
| Net Income | $ | 112,200 | |||
| Earnings per share | $ | 1.12 | |||
Required:
Prepare a multiple-step income statement for 2018 applying generally accepted accounting principles. The income tax rate is 40%. (Amounts to be deducted should be indicated with a minus sign. Round EPS answer to 2 decimal places.)
Multiple-Step Income Statement
The Carlsbad Company income statement for the year ended February 28, 20Y8 contains errors:
| CARLSBAD COMPANY | |||||||||
| Income Statement | |||||||||
| For the Year Ended February 28, 20Y8 | |||||||||
| Sales | $4,220,000 | ||||||||
| Cost of goods sold | (2,650,000) | ||||||||
| Operating income | $1,930,000 | ||||||||
| Expenses: | |||||||||
| Selling expenses | $ 800,000 | ||||||||
| Administrative expenses | 600,000 | ||||||||
| Delivery expense | 50,000 | ||||||||
| Total expenses | (1,450,000) | ||||||||
| Other expense: | 480,000 | ||||||||
| Interest revenue | 40,000 | ||||||||
| Gross profit | 440,000 | ||||||||
Prepare a corrected income statement for Carlsbad Company for the year ended February 28, 20Y8.
| Carlsbad Company | |||
| Income Statement | |||
| For the Year Ended February 28, 20Y8 Sales Cost of goods sold Gross profit Expenses: Selling expenses Administrative expenses Delivery expense Total expenses Operating income Other revenue: Interest revenue Net income |
