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For Mortenson Company, the following information is available:

Cost of goods sold $390,000
Dividend revenue 15,000
Income tax expense 36,000
Operating expenses 138,000
Sales revenue 600,000

In Mortenson's single-step income statement, gross profit:________

a. should not be reported.
b. should be reported at $51,000.
c. should be reported at $210,000
d. should be reported at $225,000

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Answer:

c. should be reported at $210,000

Explanation:

Calculation of Mortenson Company single-step income statement, gross profit:

Gross Profit will be:

Sales Revenue- Cost of goods sold

Where:

Sales Revenue =$600,000

Cost of goods sold =$390,000

Hence:

Gross Profit = $600,000 - $390,000

Gross Profit = $210,000

Therefore Mortenson's multiple-step income statement, gross profit should be reported at $210,000

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