Question

AP North Company has completed all of its operating budgets. The sales budget for the year shows 50,000 units and total sales of $2,250,000. The total unit cost of making one unit of sales is $25. Selling and administrative expenses are expected to be $300,000. Interest is estimated to be $10,000. Income taxes are estimated to be $200,000. Prepare a budgeted multiple-step income statement for the year ending December 31, 2020.

Prepare a budgeted income statement for the year.

Answer 1

AP North Company

Income statement for the year ended December 31, 2020

Amount in $'000

Sales 2,250

Cost of goods sold 1,250

Gross profit 1,000

Operating expenses

Selling and administrative expenses (300)

Non- Operating or others

Interest expense (10)

Net Income/(loss) before income taxes 690

Income taxes (200)

Net Income/(loss) after income taxes 490

Step-by-step explanation:

A multi-step income statement is one in which the elements of incomes and expenses are grouped into operating and non-operating heads.

Operating income and expenses are those that are directly related to the ordinary activities of the entity.