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In its income statement for the year ended June 30, 2009, The Clorox Company reported the following condensed data (dollars in millions).
Selling and administrative expenses $ 715 Research and development expense $ 114
Net sales 5,450 Income tax expense 276
Interest expense 161 Other expense 46
Advertising expense 499 Cost of goods sold 3,104
Assume a tax rate of 34%.
Assume the marketing department has presented a plan to increase advertising expenses by $340 million. It expects this plan to result in an increase in both net sales and cost of goods sold of 25%.
Prepare a multiple-step income statement. (Round answers to 0 decimal places, e.g. 125.)

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Answer:

Clorox Company

multiple-step income statement.

Net sales                                                                       $5,450

Less Cost of goods sold                                             ($3,104)

Gross Profit                                                                   $2346

Less Operating Expenses :

Selling and administrative expenses          $ 715

Research and development expense          $ 114

Advertising expense                                    $499     ($1,328)

Operating Income                                                        $1018

Less Non Operating Expenses :

Income tax expense                                     $276

Interest expense                                            $161

Other expense                                                $46      ($483)

Net income                                                                   $535

Explanation:

The multiple-step income statement shows separately the income derived from primary activities (operating income) and secondary activities (net income)

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