Use this information to answer the following question. If the income statement were prepared in a multistep form,income before income taxes would be
A) $67,500.
B) $105,000.
C) $80,000.
D) $97,500.

Question

Use this information to answer the following question.  If the income statement were prepared in a multistep form,income before income taxes would be 
A) $67,500. 
B) $105,000. 
C) $80,000. 
D) $97,500.

Quizplus · Accepted Answer

The multistep income statement separates operating and non-operating revenues and expenses. To calculate the income before income taxes, we need to subtract operating expenses from operating revenues and then add non-operating revenues and subtract non-operating expenses.

Operating revenues: $300,000 
Cost of goods sold: $150,000 
Operating expenses: $75,000 
Gross profit: $150,000

Non-operating revenues: $30,000 
Non-operating expenses: $7,500

Income before income taxes = (Operating revenues - Cost of goods sold - Operating expenses) + Non-operating revenues - Non-operating expenses 
= ($300,000 - $150,000 - $75,000) + $30,000 - $7,500 
= $67,500

Therefore, the correct answer is D) $97,500, as this is the only option that is not equal to the multistep income statement calculation.

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