ACC 290 Week 3 Preparing a Multiple‐Step Income Statement Individual Assignment
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
Prepared a correct detailed multi-step income statement, assuming a 25% tax rate, with a brief explanation of 700 words
Based the statement and explanation on the following scenario:
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 |
|
| 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 |
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As an experienced, knowledgeable accountant, you review the statement and determine the following facts:
Net sales consist of: sales $911000 less freight-out on merchandise sold $33000 and sales returns and allowances $28000.
Other revenues consist of sales discounts $18000 and rent revenue $4000.
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 $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.
Click the Assignment Files tab to submit your assignment.
Course: ACC290 Principles of Accounting I
School: University of Phoenix
- 12/11/2017
- 60