Prepare a detailed multi-step income statement

Assignment Help Accounting Basics
Reference no: EM131402883

Purpose of Assignment - The purpose of this assignment is to help you become familiar with the parts of the multiple-step income statement.

Assignment Steps - Resources: Financial Accounting: Tools for Business Decision Making

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 $17,000, 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.

Attachment:- Assignment File.rar

Reference no: EM131402883

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len1402883

2/21/2017 7:54:35 AM

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