Chapter 5, Problem 5.5APR

Multiple-step income statement and balance sheet

The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2018:

Cash	$240,000	Retained Earnings	$2,949,100
Accounts Receivable	966,000	Dividends	100,000
Inventory	1,690,000	Sales	11,343,000
Estimated Returns Inventory	22,500	Cost of Goods Sold	7,850,000
Office Supplies	13,500	Sales Salaries Expense	916,000
Prepaid Insurance	8,000	Advertising Expense	550,000
Office Equipment	830,000	Depreciation Expense—
Accumulated Depreciation—		Store Equipment	140,000
Office Equipment	550,000	Miscellaneous Selling Expense	38,000
Store Equipment	3,600,000	Office Salaries Expense	650,000
Accumulated Depreciation—		Rent Expense	94,000
Store Equipment	1,820,000	Depreciation Expense—
Accounts Payable	326,000	Office Equipment	50,000
Customer Refunds Payable	40,000	Insurance Expense	48,000
Salaries Payable	41,500	Office Supplies Expense	28,100
Note Payable		Miscellaneous Administrative Exp.	14,500
(final payment due 2024)	300,000	Interest Expense	21,000
Common Stock	500,000

Instructions

1. 1. Prepare a multiple-step income statement.
2. 2. Prepare a retained earnings statement.
3. 3. Prepare a balance sheet, assuming that the current portion of the note payable is $50,000.
4. 4. Briefly explain how multiple-step and s ingle-step income statements differ.