[The Following Information A × Presented below is income st + * X e https://newc
ID: 2592092 • Letter: #
Question
[The Following Information A × Presented below is income st + * X e https://newconnect.mheducation.com/flow/connect.html Seved Raintree Corporation malntalns its records on a cash basis. At the end of each year the company's accountant obtains the necessary Information to prepare accrual basis financial statements. The folowing cash flows occurred during the year ended December 31. 2018: Cash zeceipts Fzom customers Interest on note Issue of common stock $495, 000 4,000 59,000 $558,000 Total cash receipts Purchase of merchandise Annual insurance payment Payment of salaries Dividends paid to hareholder Annual zent payment 229,000 8/000 189,000 e, 000 15,000 Total cash disbursement 549,000
Explanation / Answer
1)
Multi Step Income Statement
For the year ended December 31, 2018
Particulas
Amount($)
Amount($)
Income
Sales (495000 - 510000 +88000)
5,32,000
Less:
Purchase of merchandise (229000 - 59000+80000)
2,50,000
Gross Profit
2,82,000
Less:
Insurance Expense (8000/12 *9 + 3000)
9,000
Salaries Expense (189000 - 29000 +46000)
2,06,000
Rent Expenses (15000/12 *3 + 8000)
11,750
Depreciation (73000 - 49000)
24,000
Operating Income
31,250
Interest on Note (59000*5%)
2950
Net Income
28,300
2)
Interest Receivable = 2400+2950 - 4000
1350
Prepaid Insurance = 8000/12*3
2000
Prepaid rent = 15000/12 *9
11250
Multi Step Income Statement
For the year ended December 31, 2018
Particulas
Amount($)
Amount($)
Income
Sales (495000 - 510000 +88000)
5,32,000
Less:
Purchase of merchandise (229000 - 59000+80000)
2,50,000
Gross Profit
2,82,000
Less:
Insurance Expense (8000/12 *9 + 3000)
9,000
Salaries Expense (189000 - 29000 +46000)
2,06,000
Rent Expenses (15000/12 *3 + 8000)
11,750
Depreciation (73000 - 49000)
24,000
Operating Income
31,250
Interest on Note (59000*5%)
2950
Net Income
28,300
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