Wildhorse corporation had net sales of $2,410,900 and interest revenue of $36,700 during 2020. expenses for 2020 were cost of goods sold $1,460,400, administrative expenses $218,600, selling expenses $286,400, and interest expense $50,800. wildhorse’s tax rate is 30%. the corporation had 105,200 shares of common stock authorized and 73,090 shares issued and outstanding during 2020. prepare a condensed multiple-step income statement for wildhorse corporation. (round earnings per share to 2 decimal places, e. g. 1.48.)

Explanation:

‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period.  

As per the ‘Multi-step Income Statement’ format, the operating expenses and revenue earned are segregated from non-operating expenses and revenues, gain or losses. It is calculated in 4 steps, i.e., gross profit, operating expenses, non-operating income and finally the net income.

Step 1: Calculation of Gross Profit

The first step in multi-step income statement is to calculate ‘Gross Profit’. Gross Profit is the sales revenue less the cost of goods sold during a particular period.

Step 2: Calculation of total operating expense

The second step in multi-step income statement is to calculate ‘Total Operating Expenses’. All the expenses that are incurred for the business operations are shown under the head ‘Operating Expenses’.

Step 3: Calculation of non-operating income

The third step in multi-step income statement is to calculate ‘Total Non-operating Income’. All the expenses that are indirectly related to the business operations are shown under the head ‘Non-operating Expenses’ whereas income from such sources is recorded under ‘Non-operating revenue’.

Step 4: Calculation of Net Income

The fourth step in multi-step income statement is to calculate ‘Net Income’. Net Income is the income retained after paying off the taxes. Thus, taxes would be deducted from the head ‘Income before tax’.

answer/// there is an inverse relationship between price and quantity demanded;

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