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Multiple-step income statement and balance sheet The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 20Y7: Instructions 1. Prepare a multiple-step income statement. 2. Prepare a statement of stockholders’ equity. Additional common stock of $7,500 was issued during the year ended June 30, 20Y7. 3. Prepare a balance sheet, assuming that the current portion of the note payable is $7,000. 4. Briefly explain how multiple and single-step income statements differ.

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

Solutions

Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 5, Problem 5PB
Textbook Problem

Multiple-step income statement and balance sheet

The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 20Y7:

Chapter 5, Problem 5PB, Multiple-step income statement and balance sheet The following selected accounts and their current , example  1

Chapter 5, Problem 5PB, Multiple-step income statement and balance sheet The following selected accounts and their current , example  2

Instructions

1. Prepare a multiple-step income statement.

2. Prepare a statement of stockholders’ equity. Additional common stock of $7,500 was issued during the year ended June 30, 20Y7.

3. Prepare a balance sheet, assuming that the current portion of the note payable is $7,000.

4. Briefly explain how multiple and single-step income statements differ.

(1)

To determine

Prepare the income statement of Company K for the year ended June 30, 20Y7.

Explanation of Solution

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 account like sales returns, allowances and sales discounts.

The following is the income statement of Company K.

Company K

Income Statement

For the Year Ended June 30, 20Y7

ParticularsAmount ($)Amount ($)
Sales 8,925,000
Less: Cost of merchandise sold5,620,000
Gross profit 3,305,000
Less: Operating Expenses:  
Selling Expenses:  
Sales and salaries expenses850,000 
Advertising expenses420,000 
Depreciation expense – store equipment33,000 
Miscel...

(2)

To determine

Prepare the statement of stockholders’ equity of Company K for the year ended June 30, 20Y7.

(3)

To determine

Prepare the balance sheet of Company K for the year ended June 30, 20Y7.

(4)

To determine

Explain the difference between multiple-step and single-step income statements.

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Chapter 5 Solutions

Financial And Managerial Accounting
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