Multiple-Step Income Statement and Report Form of Balance Sheet The following se
ID: 2517615 • Letter: M
Question
Multiple-Step Income Statement and Report Form of Balance Sheet
The following selected accounts and their current balances appear in the ledger of Prescott Inc. for the fiscal year ended September 30, 20Y8:
Instructions:
1. Prepare a multiple-step income statement.
2. Prepare a statement of stockholders' equity. No common stock was issued during the year. For those boxes in which no entry is required, leave the box blank.
3. Prepare a report form of balance sheet, assuming that the current portion of the note payable is $26,000.
Use the format for the report form of a balance sheet, with details on current assets, property, plant and equipment, current liabilities, and long-term liabilities. The owner’s capital amount is taken from the statement of stockholders’ equity.
4a. Select the statement that best describes how multiple-step and single-step income statements differ.
4b. In the account form balance sheet, the assets are listed on the left-hand side of the liabilities and stockholders' equities.
Recall that the report-form of a balance sheet presents the accounting equation in a downward sequence as opposed to the account-form which is a side by side presentation.
Cash $208,750 Retained Earnings (as of Sept. 30, 20Y7) $ 634,500 Accounts Receivable 375,000 Dividends 312,500 Inventory 945,000 Sales 8,917,500 Estimated Returns Inventory 87,500 Cost of Goods Sold 5,437,500 Office Supplies 37,500 Sales Salaries Expense 972,000 Prepaid Insurance 30,000 Advertising Expense 114,750 Office Equipment 288,000 Depreciation Expense— Store Equipment 20,750 Accumulated Depreciation— Office Equipment 123,750 Miscellaneous Selling Expense 5,000 Store Equipment 1,278,750 Office Salaries Expense 193,500 Accumulated Depreciation— Store Equipment 466,750 Rent Expense 99,750 Accounts Payable 121,500 Insurance Expense 57,375 Customer Refunds Payable 87,500 Depreciation Expense— Office Equipment 40,500 Salaries Payable 24,000 Office Supplies Expense 4,125 Note Payable (due evenly over next 5 years) 130,000 Miscellaneous Administrative 4,750 Common Stock 37,500 Interest Expense 30,000Explanation / Answer
1. Prepare a multiple-step income statement.
2. Prepare a statement of stockholders' equity. No common stock was issued during the year. For those boxes in which no entry is required, leave the box blank.
3. Prepare a report form of balance sheet, assuming that the current portion of the note payable is $26,000.
1. Prepare a multiple-step income statement.
Prescott Inc. Income Statement For the Year Ended September 30, 20Y8 Sales 89,17,500 Cost of goods sold 54,37,500 Net sales (X) 34,80,000 Operating expenses: Selling expenses: Sales salaries expense 9,72,000 Advertising expense 1,14,750 Depreciation expense-store equipment 20,750 Miscellaneous selling expense 5,000 Total selling expenses (A) 11,12,500 Administrative expenses: Office salaries expense 1,93,500 Rent expense 99,750 Insurance expense 57,375 Accumulated depreciation-office equipment 40,500 Office supplies expense 4,125 Miscellaneous administrative expense 4,750 Total administrative expenses (B) 4,00,000 Total operating expenses (A+B)=C 15,12,500 Operating income (X-C) 19,67,500 Other expense: Interest expense 30,000 Net income 19,37,5002. Prepare a statement of stockholders' equity. No common stock was issued during the year. For those boxes in which no entry is required, leave the box blank.
Prescott Inc. Statement of Stockholders’ Equity For the Year Ended September 30, 20Y8 Common Stock Retained Earnings Total Balances, Oct. 1, 20Y7 37,500 634500 6,72,000 Net income 0 1937500 19,37,500 Dividends 0 -312500 -3,12,500 Balances, Sept. 30, 20Y8 37,500 2259500 22,97,0003. Prepare a report form of balance sheet, assuming that the current portion of the note payable is $26,000.
Prescott Inc. Balance Sheet September 30, 20Y8 Assets Current assets: Cash 2,08,750 Accounts receivable 3,75,000 Inventory 9,45,000 Estimated returns inventory 87,500 Office supplies 37,500 Prepaid insurance 30,000 Total current assets 16,83,750 Property, plant, and equipment: Office equipment 2,88,000 Less accumulated depreciation -1,23,750 Store equipment 12,78,750 Less accumulated depreciation -4,66,750 Total property, plant, and equipment 9,76,250 Total assets 26,60,000 Liabilities Current liabilities: Accounts payable 1,21,500 Customer refunds payable 87,500 Salaries payable 24,000 Note payable (current portion) 26,000 Total current liabilities 2,59,000 Long-term liabilities: Note payable (long-term portion) 104000 Total liabilities 3,63,000 Stockholders' Equity Common stock 37500 Retained earnings 2259500 Total stockholders' equity 2297000 Total liabilities and stockholders' equity 26,60,000Related Questions
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