In its income statement for the year ended December 31, 2022, Blossom Company reported the following condensed data. Operating expenses $731,000 Interest revenue $ 44,000 Cost of goods sold 1,267,000 Loss on disposal of plant assets 27,000 Interest expense 82,000 Net sales 2,210,000 income tax expense 56,000 Other comprehensive income (net of $1,200 tax) 9,400 Prepare a multiple-step income statement. Blossom Company Income Statement None 
In its income statement for the year ended December 31, 2022, Blossom Company reported the following condensed data. $ 44,000 $731,000 Interest revenue Operating expenses 27,000 Loss on disposal of plant assets 1,267,000 Cost of goods sold 2,210,000 82,000 Net sales Interest expense 9,400 Income tax expense 56,000 Other comprehensive income (net of $1,200 tax) Prepare a multiple-step income statement. Blossom Company Income Statement For the Month Ended December 31, 2022 Net Sales $ Cost of Goods Sold Gross Profit Operating Expenses $ eTextbook and Media
The Correct Answer and Explanation is:
Blossom Company
Income Statement
For the Year Ended December 31, 2022
Net Sales ………………………………………………. $2,210,000
Cost of Goods Sold …………………………….. (1,267,000)
Gross Profit …………………………………………… 943,000
Operating Expenses ………………………………. (731,000)
Income from Operations ………………………… 212,000
Other Revenues and Gains:
Interest Revenue ……………………………………… 44,000
Other Expenses and Losses:
Interest Expense ………………………………………. (82,000)
Loss on Disposal of Plant Assets …………… (27,000)
Total Other Revenues and (Losses) ………… (65,000)
Income Before Income Taxes ………………… 147,000
Income Tax Expense ………………………………. (56,000)
Net Income ……………………………………………. $91,000
Other Comprehensive Income (net of tax)
Unrealized Gain ………………………………………….. 9,400
Comprehensive Income …………………………… $100,400
Explanation
A multiple-step income statement provides a detailed breakdown of revenues and expenses to help users better assess a company’s operational performance and financial health. This format separates operating and non-operating items, which enhances clarity for investors and analysts.
The statement begins with Net Sales, which represents the total revenues from goods or services sold. From this, Cost of Goods Sold (COGS) is subtracted to calculate Gross Profit. Gross Profit of $943,000 ($2,210,000 – $1,267,000) reflects the profitability from core operations before any other expenses.
Next, Operating Expenses ($731,000) are deducted to determine Income from Operations, which was $212,000. This figure is crucial as it shows the earnings from the company’s main activities, excluding financial and non-recurring items.
Then, other revenues and expenses are considered. Interest Revenue of $44,000 is added, while Interest Expense of $82,000 and Loss on Disposal of Plant Assets of $27,000 are subtracted. These adjustments bring the Income Before Taxes to $147,000.
After applying Income Tax Expense of $56,000, we arrive at a Net Income of $91,000.
Lastly, the income statement includes Other Comprehensive Income, which accounts for items that bypass the income statement but affect equity. In this case, an unrealized gain of $9,400 (net of tax) is added, bringing the Comprehensive Income to $100,400.
This detailed structure helps stakeholders distinguish between income from core operations and incidental or non-operating activities, offering a more transparent view of financial performance.
