Multiple-Step Income Statement and Report Form of Balance Sheet The following se
ID: 2554277 • 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 Clairemont Co. for the fiscal year ended May 31, 2018:
Required:
1. Prepare a multiple-step income statement.
2. Prepare a retained earnings statement.
3. Prepare a balance sheet, assuming that the current portion of the note payable is $20,500.
4. a. Which type of income statement shows intermediate balances?
Store Equipment
41,000 Accumulated Depreciation—
Office Equipment
191,900 Miscellaneous Selling Expense 17,900 Store Equipment 881,400 Office Salaries Expense 417,300 Accumulated Depreciation—
Store Equipment
282,400 Rent Expense 61,600 Accounts Payable 195,400 Depreciation Expense—
Office Equipment
30,800 Customer Refunds Payable 40,000 Insurance Expense 19,100 Salaries Payable 12,500 Office Supplies Expense 11,300 Note Payable
(final payment due 2024)
410,000 Miscellaneous Administrative Exp. 8,200 Common Stock 63,400 Interest Expense 12,500
Explanation / Answer
Answer:
1
CLAIREMONT, CO.
INCOME STATEMENT
FOR THE YEAR ENDED MAY 31, 2018
Sales
$ 4,699,500
Cost of merchandise sold
2,718,300
Gross profit
$ 1,981,200
Expenses:
Selling expense:
Sales salaries expense
$ 764,400
Advertising expense
210,200
Depreciation expense-store equipment
41,000
Miscellaneous selling expense
17,900
Total selling expenses
$ 1,033,500
Administrative expenses:
Office salaries expense
$ 417,300
Rent expense
61,600
Depreciation expense-office equipment
30,800
Insurance expense
19,100
Office supplies expense
11,300
Miscellaneous administrative expense
8,200
Total administrative expenses
548,300
Total operation expenses
1,581,800.00
Income from operations
$ 399,400.00
Other expense:
Interest expense
(12,500)
Net Income
$ 386,900
______________________________________________________
2
CLAIREMONT, CO.
STATEMENT OF OWNER'S EQUITY
FOR THE YEAR ENDED MAY 31, 2018
Kristina Marble, capital, June 1, 2017
$ 565,500
Net income for the year
$ 386,900
Less Devidend
76,800
Increase in owner's equity
310,100
Kristina Marble, capital, May 31,2018
$ 875,600
__________________________________
3
CLAIREMONT, CO.
BALANCE SHEET
FOR THE YEAR ENDED MAY 31, 2018
Assets
Current assets:
Cash
$ 128,300
Accounts receivable
345,100
Merchandise inventory
412,500
Office supplies
12,100
Prepaid insurance
9,400
Total current assets
$ 907,400
Property, plant, and equipment:
Store equipment
$ 881,400
Less accumulated depreciation
282,400
$ 599,000
Office equipment
282,400
Less accumulated depreciation
191,900
90,500
Total property, plant, and equipment
$ 689,500
Total assets
$ 1,596,900
Liabilities
Current liabilities:
Accounts payable
195,400
Note payable (current portion)
40,000
Salaries payable
12,500
Total current liabilities
$ 247,900
Long-term liabilities:
Nota payable (due in 2022 years)
410,000
Total liabilities
$ 657,900
Owner's Equity
Kristina Marble, capital
Common stock
63400
Retained Earning
$ 875,600
939,000
Total liabilities and owner's equity
$ 1,596,900
4
Which type of income statement shows intermediate balances
Answer: Multistep income statement
CLAIREMONT, CO.
INCOME STATEMENT
FOR THE YEAR ENDED MAY 31, 2018
Sales
$ 4,699,500
Cost of merchandise sold
2,718,300
Gross profit
$ 1,981,200
Expenses:
Selling expense:
Sales salaries expense
$ 764,400
Advertising expense
210,200
Depreciation expense-store equipment
41,000
Miscellaneous selling expense
17,900
Total selling expenses
$ 1,033,500
Administrative expenses:
Office salaries expense
$ 417,300
Rent expense
61,600
Depreciation expense-office equipment
30,800
Insurance expense
19,100
Office supplies expense
11,300
Miscellaneous administrative expense
8,200
Total administrative expenses
548,300
Total operation expenses
1,581,800.00
Income from operations
$ 399,400.00
Other expense:
Interest expense
(12,500)
Net Income
$ 386,900
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