Discuss how to prepare a correct multiple?step income statement with your collaborative group.
Speculate on the overall manner in which the newer technology will change traditional social media sites. Analyze how traditional social media sites can adapt their platforms to incorporate newer trends.
August 4, 2017Describe the two (2) international events involving the US military from the past five (5) years you investigated that can be traced back to a foreign policy created after the Civil War.
August 4, 2017Discuss how to prepare a correct multiple?step income statement with your collaborative group.
Discuss how to prepare a correct multiple?step income statement with your collaborative group.
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:
- Net sales consist of: sales $911,000, less freight-out on merchandise sold $33,000, and sales returns and allowances $28,000.
- Other revenues consist of sales discounts $18,000 and rent revenue $4,000.
- 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.
- 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
