P4-4 (LO3,4,5,6) (Multiple- and Single-Step Statements, Retained Earnings Statem

Question

P4-4 (LO3,4,5,6) (Multiple- and Single-Step Statements, Retained Earnings Statement) The following account balances were included in the trial balance of Twain Corporation at June 30, 2017 1,578,500 Depreciation expense (office Sales revenue Sales discounts Cost of goods sold Salaries and wages expense (sales) Sales commissions furniture and equipment Property tax expense Bad debt expense (selling) Maintenance and repairs $ 7,250 7,320 4,850 31,150 896,770 56,260 97,600 28,930 21,400 14,820 9,030 4,980 Interest expense 6,200 4,715 Depreciation understatement 9,130 6,000 62,300 38,000 18,000 102,000 expense (administration) Office expense Sales returns and allowances Dividends received Delivery expense Entertainment expense Telephone and Internet expense (sales) Depreciation expense (sales equipment) Maintenance and repairs expense (sales) Miscellaneous selling expenses Office supplies used Telephone and Internet expense Income tax expense due to error-2014 (net of tax) 17,700 Dividends declared on 9,000 7,000 (administration) 2,820 preferred stock Dividends declared on common stock are 80,000 shares of common stock outstanding. Instructions (a) Using the multiple-step form, prepare an income statement and a retained earnings statement for the year end tb) Using the single-step form, prepare an income statement and a retained earnings statement for the year ended J 2017 2017

Explanation / Answer

a.

b.

Twain Corporation Income Statement for the year ended June 30, 2017 Sales Revenue 1578500 Less: Sales returns and allowances 62300            Sales discounts 31150 93450 Net sales Revenue 1485050 1485050 Cost of goods sold 896770 Gross Profit 588280 Selling and administrative expenses Selling Expenses    Salaries and wages expense 56260    Sales Commissions 97600    Travel Expenses (Sales) 28930    Delivery Expenses 21400    Entertainment Expense 14820    Telephone and Internet Expense 9030    Depreciation Expense 4980    Maintenance and Repair Expense 6200    Bad Debt Expense 4850    Miscellaneous Selling Expenses 4715 Total Selling Expenses 248785 Administrative Expenses    Office Supplies Used 3450    Telephone and Internet Expense 2820    Depreciation Expense 7250    Property Expense 7320    Maintenance and Repair Expense 9130    Office Expense 6000 Total Administrative Expenses 35970 Selling and Administrative Expenses 284755 Net Operating Income 303525 Non-operatig income / (expense) Dividend Received 38000 Interest Expense -18000 Non-operating items 20000 Income before income tax 323525 Incometax Expense 102000 Net Income 221525

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