PR 6-5A Multiple-step income statement and report form of balance sheet 0131. 3
ID: 2444567 • Letter: P
Question
PR 6-5A Multiple-step income statement and report form of balance sheet 0131. 3 The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2016: Cash 5 240,000 Kristina Marble, Drawing S 100,000 Accounts Receivable 966,000 Sales 11,343,000 Merchandise Inventory 1,712,500 Cost of Merchandise 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 366,000 Office Equipment 50.000 Salaries Payable 41,500 Insurance Expense 48.000 Note Payable Office Supplies Expense 28,100 (final payment due 2022) 300.000 Miscellaneous Administrative Exp. 14,500 Kristina Marble, Capital 3,449,100 Interest Expense 21.000 Instructions I. Prepare a multiple-step income statement. 2. Prepare a statement of owner's equity. 3. Prepare a report form of balance sheet, assuming that the current portion of the note payable is 350,000. 4. Briefly explain (a) how multiple-step and single-step income statements differ and (b) how report-form and account-form balance sheets differ.Explanation / Answer
1) Multi -Step Income Statement
Statement if owner's Equity
3) Report form of balance sheet
Assets
Current assets
Cash $240,000
Accounts recievable 966,000
Merchandise inventory 1,712,500
Office supplies 13,500
Prepaid insuranec 8,000
total currenta ssets $2,940,000
Plant , property and dequipment:
Office equipment $830,000
Less: Deprecsiation 550,000 $280,000
Store equipment $3,600,000
Less: Dep 1,820,000 $1,780,000 $2,060,000
TOTAL ASSETS $5,000,000
liabilties
current liabilities
Accounts paayble $ 366,000
salaries paayble 41,500 $407,500
Long term liabilities
Notes payable 300,000
Owner's equity 4,292,000
Total liabilities and equity $5,000,000
4) Single step uses only one subtraction to arrive at net income whreas multi step income statement makes use of multi subtration to arrive at net income
Account form of balance sheet has two columns , it displays assest on left column and liabilities on the rtight column
Report form however uses only one column . assets are presented first followed by liabilities and equity.
Sales $11,343,000 Less: Csot of merchandise sold 7,850,000 Gross profit 3,493,000 Less:Operating expense: Sales salaries expense $916,000 Advertising expense 550,000 Depreciation expense 140,000 Miscellanoeus selling expense 38,000 Office salaries expense 650,000 Rent expense 94,000 Depreciation expense- office equipment 50,000 Insurance expense 48,000 Office supplies expense 28,100 Miscellanoeus adm expense 14,500 Total operating expense $2,528,600 income before interest $964,400 Less: interest expense 21,000 net income $943,400Related Questions
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