The following is a listing of all of the income statement accounts for Mulberry Street Sportswear as they appear on the adjusted trial balance as of December 31 Advertising Expense $11,100 Cost of Goods Sold 88,000 Delivery Expense 4,300 Insurance Expense 1,100 Income Tax Expense 6,560 Rent Expense 12,000 Interest Expense 1,400 Sales Revenue 162,000 Sales Discounts 9,100 Sales Returns and Allowances 18,600 a. Prepare a multistep income statement. b. Compute the gross profit percentage.

a. Multi Step income Statement is given below.

b. Gross Profit Percentage is 34.48 %.                          

Explanation:

a. Multi Step income statement separately shows operating and non-operating revenues and Expenses.

Advertising Expense = 11000

Cost of Goods Sold = 88000

Delivery Expense = 4300

Insurance Expense = 1100

Income Tax Expense = 6560

Rent Expense = 12000

Interest Expense = 1400

Sales Revenue = 162000

Sales Return & Allowance = 18600

Sales Discount = 9100

Computation

Sales Revenue                               162000

Sales Discount                               -9100

Sales return & allowance             -18600

Net Sales revenue                       134300

Cost of goods sold                        -8800

Gross Profit                                    46300

Operating Expenses

Selling Expenses

Advertising Expense                       -11000

Delivery Expense                               4300

Administrative Expenses

Rent Expense                                      -12000

Insurance Expense                              -1100

Operating income                                17900

Non Operating Revenues % Expense

Interest Expense                                   -1400  

Net Income before Tax                         16500

Income Tax Expense                             -6560

Net Income after Tax                               9940

b. Gross Profit Percentage = (Gross Profit / Net Sales ) x 100

Gross Profit %age = (46300/134300) x 100 = 34.48 %

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