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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.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 6, Problem 6.5BPR
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.

Expert Solution

(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 of Solution

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 ...
Expert Solution

(2)

To determine

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

Expert Solution

(3)

To determine

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

Expert Solution

(4)

To determine

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

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Chapter 6 Solutions

Accounting
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