Multiple-Step Income Statement
Presented Below Is Information Related to Pastry

question 96

Essay

Multiple-step income statement
Presented below is information related to Pastry Inc.
$\begin{array}{llcc} \text {Retained earnings, December 31, 2019 ......................................................... } & \$650,000 \\ \text {Sales ............................................................................................................ } &1,400,000\\ \text {Selling and administrative expenses ............................................................. } &240,000\\ \text {Hurricane loss (pre-tax) on plant.................................................................. } &250,000\\ \text {Cash dividends declared on common shares.................................................. } &33,600\\ \text { Cost of goods sold........................................................................................ } &820,000\\ \text { Gain resulting from calculation error on depreciation } &\\ \text {charge in 2019 (pre-tax) .............................................................................. } &520,000\\ \text {Other revenue.............................................................................................. } &60,000\\ \text {Other expenses............................................................................................ } &50,000\\\end{array}$
Instructions
In good form, prepare a multiple-step income statement for the year 2020. Assume a 20% tax rate and that 50,000 common shares were outstanding during the year. Pastry is a private corporation following ASPE.

---

Definitions:

Tax Benefits

Financial advantages granted by governmental policies to reduce a taxpayer's burden, often to encourage certain business activities or investments.

Capital Lease

A lease classified as an asset on a company's balance sheet, indicating the lessee has ownership-like rights.

Present Value

is a financial calculation that determines the current value of future cash flows or income streams, discounted at a particular interest rate.