Preparing Multistep Income Statements and Calculating

Gross Profit Percentage Assume #2750

Preparing Multistep Income Statements and Calculating Gross Profit Percentage Assume that
you have been hired by Big Sky Corporation as a summer intern. The company is in the process
of preparing its annual financial statements. To help in the process, you are asked to prepare an
income statement for internal reporting purposes and an income statement for external reporting
purposes. Your boss has also requested that you determine the company’s gross profit
percentage based on the statements that you are to prepare. The following adjusted trial
balance was created from the general ledger accounts on December 31.Your boss wants you to
create the spreadsheet in a way that automatically recalculates net sales and any other related
amounts whenever changes are made to the contra-revenue accounts. To do this, you know
that you’ll have to use formulas throughout the worksheets and even import or link cells from
one worksheet to another. Your friend Owen, an accountant, is willing to help.Required:Enter
the trial balance information into a spreadsheet and complete the following:1. Prepare a
multistep income statement that would be used for internal reporting purposes. Classify sales
returns and allowances and sales discounts as contra-revenue accounts.2. Prepare a multistep
income statement that would be used for external reporting purposes, beginning with the
amount for Net Sales.3. Compute the gross profit percentage (round to one decimal place).View
Solution:
Preparing Multistep Income Statements and Calculating Gross Profit Percentage Assume

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