The following selected accounts and their current balances appear in the ledger

Question

The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2016:

* Be sure to complete the statement headings. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required.

Briefly explain (a) how multiple-step and single-step income statements differ and (b) how report-form and account-form balance sheets differ.

(a) Which type of income statement shows intermediate balances?

Multiple-step

Single-step

(b) Which type of balance sheet presents assets, liabilities, and stockholders’ equity in a downward sequence?

Report form

Account form

Cash $ 243,100 Accounts Receivable 964,900 Merchandise Inventory 1,788,600 Office Supplies 14,200 Prepaid Insurance 6,400 Office Equipment 828,400 Accumulated Depreciation-Office Equipment 545,900 Store Equipment 3,593,800 Accumulated Depreciation-Store Equipment 1,829,700 Accounts Payable 360,900 Salaries Payable 41,000 Note Payable (current portion) 53,000 Note Payable (final payment due 2022) 298,000 Common Stock 502,600 Retained Earnings 3,043,000 Dividends 91,500 Sales 11,299,800 Cost of Merchandise Sold 7,844,200 Sales Salaries Expense 903,600 Advertising Expense 558,000 Depreciation Expense-Store Equipment 137,500 Miscellaneous Selling Expense 39,900 Office Salaries Expense 653,500 Rent Expense 92,600 Depreciation Expense-Office Equipment 41,900 Insurance Expense 53,800 Office Supplies Expense 34,300 Miscellaneous Administrative Expense 5,100 Interest Expense 25,600

Explanation / Answer

Solution:

Income Statement Sales 11,299,800 Less: Cost of Merchandise sold 7,844,200 Net operating income 3,455,600 Less: Selling and administrative expenses Sales Salaries expense 903,600 Advertising expense 558,000 Deprciation expense 137,500 Miscellaneous selling expense 39,900 Office Salaries expense 653,500 Rent Expense 92,600 Depreciation - Office Equipment 41,900 Insuarnce Expense 53,800 Office Supplies expense 34,300 Miscellaneous adminitrative expense 5,100 Less: Selling and administrative expenses 2,520,200 Profit before interest and tax 935,400 Less: Interest Expense 25,600 Profit after interest but before tax 909,800

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