Question

The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 20Y2:

Cash	$241,300
Accounts receivable	975,200
Inventory	1,810,700
Estimated returns inventory	21,000
Office supplies	22,300
Prepaid insurance	11,400
Office equipment	833,700
Accumulated depreciation-office equipment	540,000
Store equipment	3,606,400
Accumulated depreciation-store equipment	1,822,200
Accounts payable	364,600
Customer refunds payable	40,600
Salaries payable	42,700
Note payable (final payment due in 6 years)	317,000
Common stock	495,100
Retained earnings	3,010,700
Dividends	97,100
Sales	11,371,300
Cost of goods sold	7,854,900
Sales salaries expense	917,700
Advertising expense	542,000
Depreciation expense-store equipment	148,000
Miscellaneous selling expense	46,800
Office salaries expense	654,600
Rent expense	91,700
Depreciation expense-office equipment	43,600
Insurance expense	42,400
Office supplies expense	22,800
Miscellaneous administrative expense	6,600
Interest expense	14,000

	Required:
1.	Prepare a multiple-step income statement. Be sure to complete the statement heading. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
2.	Prepare a statement of stockholders’ equity. Additional common stock of $75,000 was issued during the year ended May 31, 20Y2. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
3.	Prepare a balance sheet, assuming that the current portion of the note payable is $55,000. Be sure to complete the statement heading. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
4.	Briefly explain how multiple-step and single-step income statements differ.

Answer 1

INCOME STATEMENT
Sales			$ 11,371,300
Cost of Merchandise sold			$     7,854,900
Gross Profit			$     3,516,400
Expenses:
Selling Expenses:
Sales Salaries Expenses	$            917,700
Advertising Expense	$            542,000
Depreciation Expense-Store Equipment	$            148,000
Miscellaneous selling expense	$              46,800
Total Selling Expenses		$      1,654,500
Administrative Expenses:
Office Salaries Expense	$            654,600
Rent Expense	$              91,700
Depreciation Expense-Office Equipment	$              43,600
Insurance Expense	$              42,400
Office Supplies Expense	$              22,800
Miscellaneous administrative expense	$                6,600
Total Administrative Expenses		$          861,700
Total Operating expenses			$     2,516,200
Income from operation			$     1,000,200
Other Expense:
Interest Expense			$           14,000
Net Income			$        986,200
STATEMENT OF OWNERS' EQUITY
	Common Stock	Retained Earnings	Total
Balance, June 1, 20Y1	$            420,100	$      3,010,700	$     3,430,800
Issue of shares	$              75,000		$           75,000
Net income for the year		$          986,200	$        986,200
Dividends		$          (97,100)	$        (97,100)
Balance, May 30, 20Y2	$            495,100	$      3,899,800	$     4,394,900
Assets
Current Assets:
Cash		$     241,300
Accounts Receivable		$     975,200
Merchandise Inventory		$ 1,810,700
Estimated returns Inventory		$       21,000
Office Supplies		$       22,300
Prepaid Insurance		$       11,400
Total Current Assets			$ 3,081,900
Property,Plant and Equipment
Office Equipment	$      833,700
Less: Accumulated Depreciation	$      540,000	$     293,700
Stores Equipment	$   3,606,400
Less: Accumulated Depreciation	$   1,822,200	$ 1,784,200
Total Property,Plant and Equipment			$ 2,077,900
Total Assets			$ 5,159,800
Liabilities:
Accounts Payable	$      364,600
Customer Refunds Payable	$        40,600
Salaries Payable	$        42,700
Note Payable(Current Portion) [317000-55000]	$        55,000
Total Current Liabilites		$     502,900
Long Term Liabilites:
Note Payable(Final payment due 2024)=(317000-55000)	$      262,000	$     262,000
Total Liabilites			$    764,900
Owner's Equity & Retained Earnings			$ 4,394,900
Total liabilities and owner's equity			$ 5,159,800