Instructions for a Multi-Stepped Income Statement

Love Thy Pets Inc., Income Statement For the Year Ended, December 31, 2011
Sales Revenues: Sales Less: Sales returns and allowances Sales discounts Net Sales Cost of Goods Sold Gross Profit Operating Expenses: Store salaries expense Administrative expense Advertising expense Utilities expense Depreciation expensestore equipment Freight-out Property tax expense Insurance expense Total operating expenses Income from operations Other Incomes and Expenses: Other Revenues and Gains: Interest revenue Gain from sales of assets Other Expenses and Losses: Interest expense Loss on sale of assets or casualty Income before income taxes Income tax expense Net Income $XXX,XXX $X,XXX XXX X,XXX XXX,XXX X,XXX XXX,XXX $XX,XXX XX,XXX X,XXX X,XXX X,XXX X,XXX X,XXX X,XXX XX,XXX XXX,XXX

$XX,XXX X,XXX X,XXX X,XXX

XX,XXX XX,XXX X,XXX $XX,XXX

MJC Revised 10/2011

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Instructions for a Multi-Stepped Income Statement

Contents
Gross Profit Section: ................................................................................................................... 3 Operating Expenses Section: ...................................................................................................... 3 Other Incomes and Expenses Section: ........................................................................................ 4

MJC Revised 10/2011

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Instructions for a Multi-Stepped Income Statement

Step-by-Step Instructions
Start with the three-line header for each statement. First the name of the company, second the title of the statement, and last the period of which the statement is being prepared. I.e., month, quarter, or year ended.

Gross Profit Section:

1. Start this section with the heading Sales Revenues: placed in the left column. There will be no dollar amount on this line in the amounts columns. 2. Indent the title Sales Revenue in the left column. Place the dollar amount with a dollar sign in the right hand column. 3. On the next two lines, place Less: Sales returns and allowances and Sales discounts. Place the amounts for these accounts in the middle column. Add them together and then place the resulting amount in the right amounts column on the same line as sales discounts. 4. Place the title Net Sale on the next line. The amount will result from subtracting the total of sales returns and allowances plus sale discounts from sales. Place the amount in the right column. 5. On the next line place the account title Cost of Goods Sold then place the amount in the right column. 6. On the last line of this section, place the account title Gross Profit in the left hand column. Subtract cost of goods sold from the net sales to get the amount. Place the amount in the right amounts column.

Operating Expenses Section:

1. Place the heading Operating Expenses: in this section in the left hand column. There will be no dollar amount on this line in the amounts columns. 2. List the normal operating expenses from highest to lowest in the next few lines. Place the individual dollar amounts in the middle column on the same lines as the title of the expense. 3. On the next line, place the title Total operating expenses. In the left column, place the total of all the expenses. 4. Now place the title Income from operations on this line. In the left column place the dollar amount, that results from subtracting total operating expenses from the gross profit amount.

MJC Revised 10/2011

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Instructions for a Multi-Stepped Income Statement

Other Incomes and Expenses Section:
1. Place the heading Other Incomes and Expenses: in this section in the left hand column. There will be no dollar amount on this line in the amounts columns. 2. Next place the heading Other Revenues and Gains: There will be no dollar amount on this line in the amounts columns. 3. Now on the next few lines list account titles for items such as interest revenues and/or gain from sales of assets. Place the dollar amount for each line in the middle column. 4. Next place the heading Other Expenses and Losses: in the left hand column. There will be no dollar amount on this line in the amounts columns. 5. On the next few lines, list the account title of items such as interest expense. In addition, list loses from sales of long-term assets and/or casualty losses causes by natural disaster. Place the dollar amount for these items in the middle column individually next to their account titles. 6. Now subtract the expenses and losses from the revenues and gains. Place the dollar amount for this section on the same line as the last expense or loss in the left column. 7. Next place the title Income before income taxes. in the left column. Now either add or subtract the dollar amount from the other incomes and expenses section from the income from operations and place the results in the right amount column. 8. Next place the account title Income tax expense in the left column. The dollar amount will be a percentage of the income before income taxes. Place the results in the right column. 9. Lastly, place the title Net income in the left column. Subtract the income tax expense from the income before income taxes. Place the results in the left column. Double underline the amount and add a dollar sign.

MJC Revised 10/2011

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