Escrow Company's multistep income statement shows cost of goods sold of $60,000, a gross margin...

Question:

Escrow Company's multistep income statement shows cost of goods sold of $60,000, a gross margin of $42,000, operating income of $12,000 and a $20,000 loss on the sale of land. Based on this information, the net income or (net loss) amounted to:

a. $12,000.

b. ($20,000).

c. ($8,000).

d. None of the answers is correct.

Multiple-Step Income Statement:

A multiple-step income statement separates the operating revenues and expenses and non-operating revenues and expenses in its presentation. The multiple-step income statement also derives the net income at the bottom line, net income being the difference between the revenues and costs and it clearly shows the gross margin, operating income and non-operating and other revenues.

Answer and Explanation: 1

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Answer: Option c) ($8,000) is correct.

Explanation:

  • As per the information:
  • Gross margin = $42,000
  • Operating income = $12,000
  • Loss on sale of land =...

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Operations of an Income Statement

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Chapter 8 / Lesson 5
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An income statement demonstrates the company's income and expenses over a given timeframe, used to reflect performance. Learn the operations of income statements in multi vs single-steps and the details of the line items they use.


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