Preparing a Multiple Step Income Statement
The adjusted trial Balance for the Year ended December 31, 2010, For ELM
Company is shown below:
ELM Company
Adjusted Trial Balance
For the Year ended December 31, 2010
Sales Returns and Allowances
Instructions: Given this data, prepare a multiple-Step Income statement
for ELM Company, assuming a tax rate of 30%.
What to do: Remember to always label your Income statements with the
company name, Income statement and for period ending. When doing a
multiple step income statement, one must remember the key elements.
They are: Net Sales, Cost of Goods Sold, Gross Profit, Total Operating
Expenses, net gain/loss from other activities, Income before taxes, Income
tax expense, and Net Income. These items will be listed on the right hand
column of the income statement, and help us understand which accounts we
use in what order.