(a)
Multi step income statement: A multiple step income statement refers to the income statement that shows the operating, and non-operating activities of the business, under separate head. In different steps of the multi-step income statement, principal operating activities are reported, that starts from the record of sales revenue with all contra sales revenue items like sales returns, allowances and sales discounts.
To Prepare: The multi-step income statement of Company C for the year ended June 30, 2017.
(b)
The profit margin and gross profit rate of Company C for the year 2017.
(c)
To Prepare: The multi-step income statement for the year ended June 30, 2017 of Company C after increase net sales and cost of goods sold by 25% and advertising expense by $340 million, The profit margin and gross profit rate of Company C for the year 2017.
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- The comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. Open the file CASHFLOW from the website for this book at cengagebrain.com. First, enter the formulas. Then, complete the worksheet in the manner described next. According to the problem, cash increased from 39,600 to 67,210 during the year. This is a 27,610 increase. To record this increase on the worksheet, move to row 17. Since this is the first account you are analyzing, enter the letter a in column C. Then enter 27610 in column D (a debit since cash increased). This brings the year-end balance (column G) to 67,210, its proper balance. Now move to the bottom part of the statement where you see the categories Operating Activities, Investing Activities, and so on. The credit side of the entry has to be entered here. The proper space for this cash entry is on row 59. Enter the letter a in cell E59 and 27610 in cell F59. Notice the totals at the bottom of the page (row 60) now agree. The next account balance that changed is accounts receivable. It increased by 9,035. To enter this change on the worksheet, enter the letter b in cell C18 and 9035 in cell D18 (again, a debit since accounts receivable increased). This brings the year-end balance in column G to 121,250, its proper balance. The change in accounts receivable balance is an operating activity adjustment (as explained in your textbook). Enter the credit side of this entry in cells E34 and F34, and enter the explanation Increase in accounts receivable in cell A34. Note: Your textbook probably shows Net income as the first item under Operating Activities. We will get to that later. The sequence in which you enter items on this worksheet is not important. All other balance sheet accounts must be analyzed in the same manner, placing appropriate debit or credit entries in the top part of the worksheet to obtain the proper balances in column G, and then entering the second side of the entry in the appropriate row on the bottom part of the worksheet. You should use letter references to identify all entries. Also, you must enter a description of the entry in column A under the appropriate activity category. Although a sequence of analyzing the balance sheet from top to bottom is suggested here, this order is not necessary. As mentioned earlier, your textbook may specify a different sequence. Also, note that some accounts may have both debit and credit adjustments to them. The worksheet is not a substitute for a statement of cash flows, but it does provide you with all the numbers you need to properly prepare one. You will be done with your analysis when: a. The individual account balances at December 31, 2013, as shown on the worksheet (column G) equal those shown in the given problem data. b. The transaction column totals are equal (cells D60 and F60). c. The sum of the operating, investing, and financing activities (cell G59) equals the change in cash (cell D59 or F59). When you are finished, enter your name in cell A1. Save your completed file as CASHFLOW2. Print the worksheet when done. Also print your formulas. Check figure: Total credits at 12/31/2013 (cell G31), 860,460.arrow_forwardIn its income statement for the year ended December 31, 2022, Splish Brothers Inc. reported the following condensed data. Prepare a multiple step income statement , and then calculate the profit margin and gross profit rate. Salaries and wages expenses $576,600 Loss on disposal of plant assets $103,540 Cost of goods sold 1,223,880 Sales revenue 2,740,400 Interest expense 89,460 Income tax expense 31,000 Interest revenue 80,600 Sales discounts 198,400 Depreciation expense 384,400 Utilities expense 136,400arrow_forwardIn its income statement for the year ended December 31, 2022, Crane Company reported the following condensed data. Salaries and wages expenses $381,300 Loss on disposal of plant assets $ 68,470 Cost of goods sold 809,340 Sales revenue 1,812,200 Interest expense 58,220 Income tax expense 20,500 Interest revenue 53,300 Sales discounts 131,200 Depreciation expense 254,200 Utilities expense 90,200 Prepare a multiple-step income statement. (List other revenues before other expenses.)arrow_forward
- Suppose in its income statement for the year ended June 30, 2022, The Clorox Company reported the following condensed data (dollars in millions). Salaries and wages expenses $ 460 Research and development expense $ 114 Depreciation expense 90 Income tax expense 1,008 Sales revenue 9,230 Loss on disposal of plant assets 46 Interest expense 161 Cost of goods sold 4,500 Advertising expense 499 Rent expense 105 Sales returns and allowances 230 Utilities expense 60 Assume a tax rate of 34%. Gross profit rate enter percentages rounded to 1 decimal place% Profit margin enter percentages rounded to 1 decimal place%arrow_forwardThe following information is available for UST Company: Sales $850,000 Interest Revenue 5,000 Cost of Goods Sold 350,000 Salaries Expense 100,000 Supplies Expense 15,000 Interest Expense 25,000 Advertising Expense 65,000 Use the above information to prepare a multiple-step income statement for the year ended December 31, 2014.arrow_forwardBrick & Stone Income Statement for the year ended 31 December 2016 Notes $ $ Sales 2,500,000 Cost of Sales 1 1,100,000 Gross Profit 1,400,000 Expenses Salaries & Wages 2 760,000 Employer NIS Contribution 2,400 Rent and Rates 3 240,000 Insurance 50,000 Maintenance 120,000 Depreciation 4 55,000 Loss on Disposal of Vehicle 5 10,000 Telephone 6 35,000 Electricity 7 54,000 Utilities 70,000 Entertainment 8 100,000 Donations 9 85,000 Provision for Bad Debts 10 80,000 Fines and Penalties 11 15,000 Drawings 105,000 1,781,400 Net Profit/ (Loss) (381,400) Brick & Stone Notes to the Income Statement The Cost of Sales includes goods valuing $250,000 that were purchased for Mr. Stone’s personal use. Salaries and Wages include $25,000 per month, and $20,000 per month, paid to Mr. Stone and Mr. Brick respectively. $65,000 of the rent relates to the private dwelling of Mr. Brick’s wife. The rates of depreciation on the fixed assets of the business are below those given in the…arrow_forward
- The accountant of Latifa Shoe Co. has piled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2020. Rent revenue $ 29,000 Interest expense 18,000 Market appreciation on land above cost 31,000 Salaries and wages expense (selling) 114,800 Supplies (selling) 17,600 Income tax 23,100 Salaries and wages expense (administrative) 135,900 Other administrative expenses 51,700 Cost of goods sold 496,000 Net sales 980,000 Depreciation on plant assets (70% selling, 30% administrative) 65,000 Cash dividends declared 16,000 There were 20,000 shares of common stock outstanding during the year. Instructions a. Prepare a multiple-step income statement. b. Prepare a single-step income statement. c. Which format do you prefer? Discuss.arrow_forwardThe accountant of Whispering Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2020. Rent revenue $31,000 Interest expense 20,000 Market appreciation on land above cost 33,000 Salaries and wages expense (selling) 116,800 Supplies expense (selling) 19,600 Income tax 25,100 Salaries and wages expense (administrative) 137,900 Other administrative expenses 53,700 Cost of goods sold 498,000 Net sales 982,000 Depreciation on plant assets (70% selling, 30% administrative) 67,000 Cash dividends declared 18,000 There were 20,000 shares of common stock outstanding during the year. Prepare a multi-step income statementarrow_forwardUse the following information from Eiffel Company’s financial statements. 2018 IncomeStatement BalanceSheets Sales $309,000 Cost of Goods Sold (145,000) Operating Expenses, other than Depreciation Expense (27,000) Depreciation expense (16,000) Gain on Sale of Plant Assets 16,000 Net Income $137,000 Dec. 31,2018 Accounts Receivable $45,300 Inventory 1,600 Accounts Payable 22,500 Accured Liabilities 900 Dec. 31, 2017 Accounts Receivable $22,250 Inventory 1,800 Accounts Payable 22,250 Accured Liabilities 1,150 Prepare the operating activities section of the statement of cash flows (indirect method) for the year 2018. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments. Eiffel Company Statement of Cash Flows (Indirect Method) For the Year Ended December 31, 2018 Operating…arrow_forward
- The following is an income statement from the financial records of Peace, Love and Joy Company for the year ended December 31, 2015: Income Statement Sales (net) $ 245,675 Cost of Goods Sold (67,500) Gross Profit $ 178,175 Operating expenses (125,000) Operating Income $ 53,175 Interest revenue 5,600 Interest expense (8,750) Income before taxes $ 50,025 Income tax expense (15,008) Net Income $ 35,017 Refer to Exhibit 5-2. Compute earnings-based interest coverage for Peace, Love, and Joy Company. 6.72 times 5.72 times 16.88 times 6.08 timesarrow_forwardThe table below contains data on Fincorp Inc. The balance sheet items correspond to values at year-end 2018 and 2019, while the income statement items correspond to revenues or expenses during the year ending in either 2018 or 2019. All values are in thousands of dollars. 2018 2019 Revenue $ 4,000 $ 4,100 Cost of goods sold 1,900 2,000 Depreciation 440 460 Inventories 290 340 Administrative expenses 400 450 Interest expense 110 110 Federal and state taxes* 350 370 Accounts payable 330 405 Accounts receivable 380 440 Net fixed assets† 5,500 6,340 Long-term debt 2,900 3,330 Notes payable 821 520 Dividends paid 440 440 Cash and marketable securities 850 460 * Taxes are paid in their entirety in the year that the tax obligation is incurred. † Net fixed assets are fixed assets net of accumulated depreciation since the asset was…arrow_forwardBelow are the financial statements of Coco Stationary Statement of Comprehensive Income for the Year ended 31 December 2017 $ $ Sales 305,830 Cost of goods sold 210,935 Depreciation 26,850 Earnings before interest and taxes 68,045 Interest paid 11,930 Taxable income 56,115 Taxes (35%) 19,640 Net income 36,475 Dividends 20,000 Retained earnings 16,475 Coco Stationary Statement of Financial Position as at 31 December 2017 $ Net plant and equipment 260,525 Cash 22,050 Accounts receivable 13,850 Inventory 24,650 Total current assets 60,550 Total assets 321,075 Ordinary shares 25,000 Retained earnings 167,840 Total owners' equity 192,840 Long term debt 85,000 Accounts payable 22,850 Notes payable 9,000 Other 11,385 Total current liabilities 43,235 Total liabilities after owners' equity 321,075 Calculate the following financial ratios as at 31 December 2017 a. Liquidity ratios: 1)…arrow_forward
- Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning