The Net Income computed from the multi-step Income Statement is $118,000
Organizations utilize a multi-step income statement as part of their financial reporting to calculate and display net income. An income statement's simpler format adds up gross income and deducts expenses to calculate net income.
Gross Profit = Sales revenue - Cost of Goods Sold
Total Operating Expenses = Salaries expense + Advertising expense + Utility expense
Operating Income = Gross Profit - Total Operating Expenses
Income before income taxes = Operating Income - Interest Expenses
Net Income = Income before income taxes - Income tax expenses
For the year ended December 31, 2021
Sales revenue $390,000
Cost of Goods Sold $128,000
Gross Profits $262,000
Salaries expense $33,000
Advertising expenses $22,000
Utilities expense $42,000
Total Operating Expenses $97,000
Operating Income $165,000
Interest Expenses $10,000
Income before income taxes $155,000
Income tax expenses $37,000
Net Income $118,000
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