BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Multiple step income statement and balance sheet

The following selected accounts anti their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 2019:

Cash $92,000
Accounts Receivable 450,000
Merchandise Inventory 370,000
Estimated Returns Inventory 5,000
Office Supplies 10,000
Prepaid Insurance 12,000
Office Equipment 220,000
Accumulated Depreciation—Office Equipment 58,000
Store Equipment 650,000
Accumulated Depreciation—Store Equipment 87,500
Accounts Payable 38,500
Customer Refunds Payable 10,000
Salaries Payable 4,000
Note Payable  
(final payment due 2032) 140,000
Gerri Faber. Capital 431,000
Gerri Faber, Drawing $300,000
Sales 8,925,00
Cost of Merchandise Sold 5,620,00
Sales Salaries Expense 850,000
Advertising Expense 420,000
Depreciation Expense— Store Equipment 33,000
Miscellaneous Selling Expense 18,000
Office Salaries Expense 540,000
Rent Expense 48,000
Insurance Expense 24,000
Depredation Expense—Office Equipment 10,000
Office Supplies Expense 4,000
Miscellaneous Administrative Exp. 6,000
Interest Expense 12,000

Instructions

1.    Prepare a multiple-step income statement.

2.    Prepare a statement of owner’s equity.

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

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

(1)

To determine

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.

To Prepare: The income statement of Company K for the year ended June 30, 2019.

Explanation

The following is the income statement of Company K.

Company K

Income Statement

For the Year Ended June 30, 2019

Particulars Amount ($) Amount ($)
Sales 8,925,000
Less: Cost of merchandise sold 5,620,000
Gross profit 3,305,000
Less: Operating Expenses:  
Selling Expenses:  
Sales and salaries expenses 850,000  
Advertising expenses 420,000  
Depreciation expense – store equipment 33,000  
Miscellaneous selling expense 18,000  
Total Selling Expenses 1,321,000
Administrative Expenses ...

(2)

To determine

To Prepare: The statement of owner’s equity of Company K for the year ended June 30, 2019.

(3)

To determine

To Prepare: The balance sheet of Company K for the year ended June 30, 2019.

(4)

To determine

To Explain: The difference between multiple-step and single-step income statements.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is cultural diversity in an organization?

Foundations of Business (MindTap Course List)

What is inflation and what causes it?

Principles of Economics (MindTap Course List)

Differentiate between ROE and ROIC.

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

Identify four measures of profitability calculated by FCI.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

How should the capital structure weights used to calculate the WACC be determined?

Fundamentals of Financial Management (MindTap Course List)

RATIO CALCULATIONS Graser Trucking has 12 billion in assets, and its tax rate is 40%. Its basic earning power (...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Explain how access to local information can improve decision making.

Cornerstones of Cost Management (Cornerstones Series)