Preparing a Multiple?Step Income Statement
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August 4, 2017What advantages does your organization have? What do you do better than anyone else? What unique or lowest-cost resources can you draw upon that others cannot?
August 4, 2017The 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:
- 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.
Prepare a detailed multi-step income statement with a brief explanation of 200 words. Assume a 25% tax rate. I have uploaded the work sheet you will need to fill out for this assignment!! Please put this at the bottom of th excel worksheet I have provided for you to fill out!!!
Show your work on the Excel® spreadsheet and submit with your explanation.
