On October 31, 2016, the balances of the accounts appearing in the ledger of Pre

Question

On October 31, 2016, the balances of the accounts appearing in the ledger of Prestige Furnishings Company, a furniture wholesaler, are as follows Accumulated Depreciation Building Building Cash Cost of Merchandise Sold Interest Expense Jan Brown, Capital Jan Brown, Drawing Merchandise Inverntory Notes Payable Office Supplies Salaries Payable Sales Selling Expenses $740,950 544,400 2,512,350 180,350 3,967,700 9,950 1,629,600 175,450 938,750 245,000 20,500 7,750 6,634,950 733,400 Previous Next All work saved. Assignment Score: 0.0%Time Remaining: 2:51:07 1:44 PM Accounting/12BRA.. noo

Explanation / Answer

a) multi-stage Income Statement: Amount $ Sales 6634950 Less: Cost of Merchandise Sold 3957700 Gross Profit 2677250 Less: Selling exp 733400 Income before admin and Interest exp 1943850 Less: Administration exp 544400 Income before interest exp 1399450 Less: Interest exp 9950 Net Income 1389500 b) Advantages of Multi-stage income statement are: 1) easy assess of gain at each level of expense 2) margin of the sales has been maintained got verified. 3) quantum of each expense and its effect on income is checked. 4) which expense has to be controlled is confirmed. Date Accounts Titles Debit $ Credit $ 1-Mar AR 28400 Sales 28400 COMS 19500 Merchandise Inventory 19500 14-Mar Cash 27832 Trade discount 568 AR 28400

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