Question

Multiple-Step Income Statement and Report Form of Balance Sheet

The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 2019:

Cash	$111,300		Gerri Faber, Drawing	$66,700
Accounts Receivable	302,100		Sales	4,025,000
Merchandise Inventory	338,400		Cost of Merchandise Sold	2,358,600
Estimated Returns Inventory	13,350		Sales Salaries Expense	663,300
Office Supplies	10,500		Advertising Expense	182,400
Prepaid Insurance	8,100		Depreciation Expense—Store Equipment	35,500
Office Equipment	245,000		Miscellaneous Selling Expense	15,600
Accumulated Depreciation—Office Equipment	166,500		Office Salaries Expense	362,100
Store Equipment	764,800		Rent Expense	53,500
Accumulated Depreciation—Store Equipment	245,000		Insurance Expense	16,600
Accounts Payable	169,500		Depreciation Expense—Office Equipment	26,700
Customer Refunds Payable	26,700		Office Supplies Expense	9,800
Salaries Payable	10,800		Miscellaneous Administrative Exp.	7,100
Note Payable (final payment due 2032)	355,000		Interest Expense	10,800
Gerri Faber, Capital	603,750

1. Prepare a multiple-step income statement.

2. Prepare a statement of owner's equity.

3. Prepare a balance sheet, assuming that the current portion of the note payable is $14,200.

4. Which type of income statement shows intermediate balances?

I think that I know some of these answers but I am concerned that I am getting the wrong answers.

Answer 1

Kanpur Co.
Income Statement
For the Year Ended June 30, 2019
Sales			$4,025,000
Cost of Merchandise sold			$2,358,600
Gross Profit             [$4,025,000 - $2,358,600]			$1,666,400
Operating expenses:
Selling Operating Expenses
Sales Salaries Expense	$663,300
Advertising Expense	$182,400
Depreciation Expense - Store Equipment	$35,500
Miscellaneous Selling Expenses	$15,600
Total Selling Operating Expenses		$896,800
Administrative Operating Expenses
Office Salaries Expense	$362,100
Rent Expense	$53,500
Insurance Expense	$26,700
Depreciation Expense - Office Equipment	$16,600
Office supplies Expenses	$9,800
Miscellaneous Administrative Expenses	$7,100
Total Administrative Operating expenses		$475,800
Total Operating Expenses                                         [$896,800 + $475,800]			$1,372,600
Operating Income                                                  [$1,666,400 - $1,372,600]			$293,800
Other revenue and expense
Interest Expense			($10,800)
Net income                                                              [$293,800 - $10,800]			$283,000

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Kanpur Co.
Statement of Owners Equity
For the Year Ended June 30, 2019
Gerri Faber, Capital, July 1, 2018		$603,750
Net Income for the year                           [Refer Income Statement]	$283,000
Withdrawals	($66,700)
Increase in owner's equity                         [$283,000 - $66,700]		$216,300
Gerri Faber, Capital, June 30, 2019     [$603,750 + $216,300]		$820,050

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Kanpur Co.
Balance Sheet
June 30, 2019
Assets
Current Assets:
Cash		$111,300
Accounts Receivable		$302,100
Merchandise Inventory		$338,400
Estimated returns inventory		$13,350
Office supplies		$10,500
Prepaid Insurance		$8,100
Total current assets			$783,750
Property, Plant, and Equipment
Office Equipment	$245,000
Less: Accumulated depreciation	$166,500	$78,500
Store Equipment	$764,800
Less: Accumulated depreciation	$245,000	$519,800
Total Property, Plant and Equipment          [$78,500 + $519,800]			$598,300
Total assets                                                     [$783,750 + $598,300]			$1,382,050
Liabilities
Current liabilities
Accounts Payable		$169,500
Customer refunds payable		$26,700
Salaries payable		$10,800
Notes payable (Current portion)		$14,200
Total current liabilities			$221,200
Long-term liabilities
Notes payable (Final Payment due 2032)    [Total notes payable - Current portion notes payable = $355,000 - $14,200]			$340,800
Total liabilities                                                [$221,200 + $340,800]			$562,000
Owners Equity
Gerri Faber, Capital                                 [Refer Statement of Owners Equity]			$820,050
Total Liabilities and Owner's equity               [$562,000 + $820,050]			$1,382,050

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4. Which type of income statement shows intermediate balances?

Multiple-step income statement.