Income Statement

Exercise 1: Placement in a Multiple-Step Income Statement Use the codes below to indicate where each item would appear in a Multiple-Step Income Statement prepared for the period ending December 31. A. Operating Revenues B. Operating Expenses C. Other Revenue and Gains D. Other Expenses and Losses E. Separately reported items below Income from Continuing Operations X. Would not appear on an Income Statement

	Account	Placement
1	Accounts Receivable
2	Accumulated Depreciation
3	Administrative Expenses
4	Cost of Goods Sold
5	Depreciation Expense
7	Gain on Sale of Investments
8	Income Tax Expense
9	Interest Expense
10	Interest Income
11	Loss for Inventory Write-Down
12	Loss on Sale of Discontinued Operations
13	Loss on Sale of Land
14	Patent
15	Prepaid Insurance
16	Rent Revenue
18	Research and Development
19	Restructuring Costs
20	Sales Revenue
21	Selling Expense
22	Unearned Rent Revenue

Exercise 2: Completing a Multiple-Step Income Statement

The following selected account balances were taken from the trial balance of Dallas Corporation as of June 30, 2018. All accounts have normal balances.

Sales $1,678,500

Sales Discounts 31,150

Common Stock 1,300,000

Salaries Expense Sales 61,110

Depreciation Expense Office Furniture 7,250

Equipment 880,360

Travel Expense Sales 28,930

Freight-Out (Delivery Costs) 21,400

Depreciation Expense Sales Equipment 4,980

Retained Earnings, July 1, 2017 2,450,000

Utilities Expense Office 9,130

Wage Expense Office 136,700

Interest Expense 18,990

Miscellaneous Expense -- Office 6,000

Dividend Revenue 38,000

Allowance for Doubtful Accounts 45,000

Cost of Goods Sold 1,043,845

Additional Information:

In March, 2018, the corporation discontinued the operations of its publishing division (a major component of its business). During the current fiscal year, the publishing division had an operating loss of $110,000 and its assets were sold at a gain of $890,400.

The corporation had a $20,000 loss on the sale of a manufacturing facility (not related to the discontinued publishing division).

The tax rate which applies to all items is 30%.

There were 80,000 shares of common stock outstanding throughout the year.

Instructions: On the next two pages, fill in the yellow highlighted spaces to complete the multiple-step income statement for Dallas Corporation for the year ended June 30, 2018.

Continued