Please Create a Mutli-Step income statement using the left column.
Book-Tax Book Income Taxable Income Description Adjustments (Dr)* (Dr) Cr (Dr) Cr Revenue from sales $60,000,000 $60,000,000 Cost of goods sold (38,000,000) (38,000,000) Gross profit $22,000,000 $22,000,000 Other income: Dividend income 30,000 30,000 Interest income 108,000 120,000 (12,000)Ex. I 28,000EX. 7 Capital gains (losses) (28,000) Gain on fixed asset dispositions 54,000 16,000EX.. 4 70.000 $22,176,000 $22,208,000 Gross income Expenses: Compensation (9,868,000) (9,868,000) (150,000)Exh. 4 Deferred compensation (450,000) (300,000) Stock option compensation (100,000) 100,000Ex. 6 Bad debt expense 70,000Exh. 4 (165,000) (95,000) Moved below Charitable contributions (700,000)Exh. 4 Depreciation (2,400,000) (3,100,000) Advertising (1,920,000) (1,920,000) Warranty expenses (580,000) 170,000Exh. 4 (410,000) 14,000Ex. 1 Meals (28,000) (14,000) 34,000Ex. 1 Life insurance premiums (34,000) Other expenses (64,000) (64,000) Federal income tax expense (2,000,000)* 2,000,000Ex. 2 Total expenses before (15,921,000) (17,459,000) charitable contribution, NOL, and DRD $ 6,287,000 4,717,000 Income before charitable contribution, NOL, and DRD NOL carryover from prior year (24,000)Ex. 9 (24,000) Taxable income for charitable 6,263,000 contribution limitation purposes Charitable contributions 73,700EX. 13 (700,000) (626,300) Taxable income before DRD 5,636,700 Dividends received (15,000)Ex. 17 (15,000) deduction (DRD) $ 4,017,000 $ 5,621,700 Book/taxable income To properly understand corporate taxes, you must also understand book (financial reporting) income statements. Please use the information from the left column of Exhibit 16-7 to prepare a proper multi-step income statement. To assist you, I provide Intermediate Accounting slides (see slides 7 and 8 as examples). You may submit below, in an Excel spreadsheet, or very neatly handwritten PDF. I also attach the tax return (exhibit 16-8), but you do not need it now, except for the company name and year. So this question is not a tax question at all. It is a financial accounting question that asks you to prepare a proper tax return
