g The adjusted trial balance of Pacific Scientific Corporation on December 31, 2021, the end of the company's fiscal year, contained the following income statement items ($ in millions): sales revenue, $2,140; cost of goods sold, $1,300; selling expense, $145; general and administrative expense, $135; interest expense, $60; and gain on sale of investments, $80. Income tax expense has not yet been recorded. The income tax rate is 25%. Prepare a multiple-step income statement for 2021.

Net income is $435

Explanation:

A multi-step income statement is an income statement that shows the detailed expenses, income and total profit of a company for a articular period by using multiple equations to estimate the net income of the company.

This can be prepared as follows:

Pacific Scientific Corporation

Multiple-step income statement for 2021

Details                                                 $' million

Sales revenue                                         2,140

Cost of goods sold                                (1,300)

Gross profit                                               840

Selling expense                                       (145)

General and administrative expense     (135)

Operating income                                    560

Other income:

Gain on sale of investments                     80

Income before interest                            640

Interest expense                                       (60)

Income before tax                                   580

Income tax expense (25% * 580)           (145)

Net income                                               435

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