Problem 3-24 Preparing a schedule of cost of goods sold and multistep and single

Question

Problem 3-24 Preparing a schedule of cost of goods sold and multistep and single- step income statements: Periodic system (Appendix) The following account titles and balances were taken from the adjusted trial balance of Omar Farm Co. for 2014The company uses the periodic inventory system. Account Title Balance Sales returns and allowances Miscellaneous expense Transportation-out Sales Advertising expense Salaries expense Transportation-in Purchases Interest expense Merchandise inventory, January 1 s 6,500 800 1,400 130,500 5,500 17,000 3,450 84,000 720 12,400 10,000 8,100 2,500 6,800 1,420 Merchandise inventory, December 31 Purchase returns and allowances Loss on sale of land Utilities expense Required a. Prepare a schedule to determine the amount of cost of goods sold. b. Prepare a multistep income statement. c. Prepare a single-step income statement.

Explanation / Answer

a.

b.

c. Single step income statement:

Particulars Amount Amount Opening 12,400 Purchases 84,000 Less returns -2,500 Net 81,500 81,500 Transportation in 3,450 Total Goods available for sale 97,350 Less: Closing balance 8,100 Cost of goods sold 89,250

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