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Multiple-Step Income Statement and Report Form of Balance Sheet Required: 1. Pre

ID: 2464187 • Letter: M

Question

Multiple-Step Income Statement and Report Form of Balance Sheet

Required:

1. Prepare a multiple-step income statement.

2. Prepare a statement of owner's equity.

3. Prepare a balance sheet, assuming that the current portion of the note payable is $16,000.

4. a. Which type of income statement shows intermediate balances?
SelectMultiple-stepSingle-stepItem 90

b. Which type of balance sheet presents assets, liabilities, and owner's equity in a downward sequence?
SelectAccount formReport form

GLOUCESTER CO.
Income Statement
For the Year Ended August 31, 2014 Revenue from sales: SelectCashMerchandise inventoryPrepaid insuranceSales discountsSalesItem 1 SelectLess: Accounts receivableLess: CashLess: Cost of merchandise soldLess: Gross profitLess: Sales returns and allowancesItem 3 SelectLess: Accounts receivableLess: CashLess: Sales discountsLess: SalesPlus: Sales discountsItem 5 SelectGross profitMia Reynolds, capitalNet incomeNet salesNote payableItem 8 SelectAccounts payableCost of merchandise soldInsurance expenseMerchandise inventoryStore EquipmentItem 10 SelectAccounts payableGross profitIncome from operationsNet incomeNet salesItem 12 Expenses: Selling expenses: SelectCost of merchandise soldNet salesOffice suppliesSales discountsSales salaries expenseItem 14 SelectAccounts payableAdvertising expenseCashDepreciation expense-office equipmentSales returns and allowancesItem 16 SelectAccounts receivableAccumulated depreciation-store equipmentDepreciation expense-store equipmentMia Reynolds, capitalStore equipmentItem 18 SelectCost of merchandise soldMiscellaneous selling expenseOffice equipmentOffice salaries expenseSalesItem 20 Total selling expenses Administrative expenses: SelectMia Reynolds, capitalMerchandise inventoryOffice salaries expenseOffice suppliesSalesItem 23 SelectAccounts receivableAccounts payableNotes payableRent expenseSales returns and allowancesItem 25 SelectAccumulated depreciation-office equipmentCashDepreciation expense-office equipmentOffice equipmentOffice suppliesItem 27 SelectAccounts payableCashInsurance expensePrepaid insuranceSales discountsItem 29 SelectAccounts payableOffice equipmentOffice supplies expenseOffice suppliesSales returns and allowancesItem 31 SelectAccounts receivableInterest expenseMiscellaneous administrative expenseNotes payableSalesItem 33 Total administrative expenses Total operating expenses SelectGross profitIncome from operationsLoss from operationsNet incomeNet lossItem 37 SelectCost of merchandise soldGross profit:Net sales;Other expense:Other income:Item 39 SelectAdvertising expenseMiscellaneous selling expenseInterest expenseOffice supplies expenseSales discountsItem 40 SelectGross profitIncome from operationsLoss from operationsNet incomeNet lossItem 42

Explanation / Answer

Revenue from sales

4,576,000

Less:Sales return

      31,000

Sales discounts

    28,000

Net sales

$4,517,000

Less:Cost of merchandise sold

   2,650,000

Gross profit

1,867,000

Expenses:

Salaries expenses

745,000

Adverstising expenses

205,000

Depreciation – store equipment

40,000

Miscellaneous expense

18,000

Office salaries expense

410,000

Rent expense

60,000

Depreciatione expense – Office Equipment

30,000

Insurance expense

18,000

Office supplies expense

11,000

Misc admisnistrative expense

   8,000

Total operating expense

1,545,000

Total operating income

322,000

Other expenses

Interest expense

   12,000

Net income

$310,000

Owner’s Equity

Mia Reynold’s capital

675,000

Add:Net income

310,000

Less:Drawing

75,000

Closing balance

910,000

Assets

Liabililties & owners Equity

Cash       125,000

Accounts payable 193,000

Account

Receivable 335,000

Salaries payable

12,000

Inventory 380,000

Total current liabilities

205,000

Office supplies 12,000

Prepaid insurance 9000

Long term liabiltieis

Total current assets

861,000

Notes payable

400,000

Fixed Assets

Owner’s equity

910,000

Office equipment 275,000

Less:Dep -187,000

88,000

Store equipment

859,000

Less : Dep 293,000

566,000

Total Assets

$1,515,000

total

$1,515,000

4) Multi step income statement

5) Report form

Revenue from sales

4,576,000

Less:Sales return

      31,000

Sales discounts

    28,000

Net sales

$4,517,000

Less:Cost of merchandise sold

   2,650,000

Gross profit

1,867,000

Expenses:

Salaries expenses

745,000

Adverstising expenses

205,000

Depreciation – store equipment

40,000

Miscellaneous expense

18,000

Office salaries expense

410,000

Rent expense

60,000

Depreciatione expense – Office Equipment

30,000

Insurance expense

18,000

Office supplies expense

11,000

Misc admisnistrative expense

   8,000

Total operating expense

1,545,000

Total operating income

322,000

Other expenses

Interest expense

   12,000

Net income

$310,000