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Category > Accounting Posted 13 Jul 2017 My Price 15.00

Preparing a Multiple‐Step Income Statement

I have attached the docs needed for this question.

Purpose of Assignment 

The purpose of this assignment is to help you become familiar with the parts of the multiplestep income statement. 

 

Scenario: An inexperienced accountant prepared this condensed income statement for Simon Company, a retail firm that has been in business for a number of years.

 

SIMON COMPANY

Income Statement
For the Year Ended December 31, 2017

 

Revenues

 

Net sales

$850,000

Other revenues

22,000

 

872,000

Cost of goods sold

555,000

Gross profit

317,000

Operating expenses

 

Selling expenses

109,000

Administrative expenses

103,000

 

212,000

Net earnings

$105,000

As an experienced, knowledgeable accountant, you review the statement and determine the following facts:

  1. Net sales consist of: sales $911,000, less freight-out on merchandise sold $33,000, and sales returns and allowances $28,000.
  2. Other revenues consist of sales discounts $18,000 and rent revenue $4,000.
  3. Selling expenses consist of salespersons' salaries $80,000, depreciation on equipment $10,000, advertising $13,000, and sales commissions $6,000.  The commissions represent commissions paid. At December 21, $3,000 of commissions have been earned by salespersons but have not been paid.  All compensation should be recorded as Salaries and Wages Expense.
  4. Administrative expenses consist of office salaries $47,000, dividends $18,000, utilities $12,000, interest expense $2,000, and rent expense $24,000, which includes prepayments totaling $6,000 for the first quarter of 2018. 

Prepare a detailed multi-step income statement with a brief explanation of 700 words. Assume a 25% tax rate. 

Show your work on the Excel® spreadsheet and submit with your explanation.

 

 

 

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Status NEW Posted 13 Jul 2017 01:07 PM My Price 15.00

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