Question

Single-Step Income Statement

Selected accounts and related amounts for Kanpur Co. for the fiscal year ended June 30, 2019, are shown below.

Cash	$92,000		Gerri Faber, Drawing	$300,000
Accounts Receivable	450,000		Sales	8,925,000
Merchandise Inventory	370,000		Cost of Merchandise Sold	5,620,000
Estimated Returns Inventory	5,000		Sales Salaries Expense	850,000
Office Supplies	10,000		Advertising Expense	420,000
Prepaid Insurance	12,000		Depreciation Expense—Store Equipment	33,000
Office Equipment	220,000		Miscellaneous Selling Expense	18,000
Accumulated Depreciation—Office Equipment	58,000		Office Salaries Expense	540,000
Store Equipment	650,000		Rent Expense	48,000
Accumulated Depreciation—Store Equipment	87,500		Insurance Expense	24,000
Accounts Payable	38,500		Depreciation Expense—Office Equipment	10,000
Customer Refunds Payable	10,000		Office Supplies Expense	4,000
Salaries Payable	4,000		Miscellaneous Administrative Exp.	6,000
Note Payable (final payment due 2032)	140,000		Interest Expense	12,000
Gerri Faber, Capital	431,000

Required:

1. Prepare a single-step income statement in the format shown in Exhibit 12 .

Single-Step Income Statement
KANPUR CO. Income Statement For the Year Ended June 30, 2019
1	Sales
2	Expenses:
3	Cost of merchandise sold
4	Selling expenses
5	Administrative expenses
6	Interest expense
7	Total expenses
8	Net income

2. Prepare closing entries as of June 30, 2019 in the order as presented in the chapter. For a compound transaction, if an amount box does not require an entry, leave it blank.

Closing Entries
	Date	Account	Debit	Credit
1	June 30, 2019
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Answer 1

1.

Single-Step Income Statement
KANPUR CO.
Income Statement
For the Year Ended June 30, 2019
Sales
Expenses:		8,925,000
Cost of Merchandise Sold		-5,620,000
Selling expenses:
Sales Salaries Expense	850,000
Advertising Expense	420,000
Miscellaneous Selling Expense	18,000
Total selling expenses		-1,288,000
Administrative expenses:
Depreciation Expense—Store Equipment	33,000
Office Salaries Expense	540,000
Rent Expense	48,000
Insurance Expense	24,000
Depreciation Expense—Office Equipment	10,000
Office Supplies Expense	4,000
Miscellaneous Administrative Exp.	6,000
Total administrative expenses		-665,000
Interest Expense		-12,000
Total expenses		-7,585,000
Net income		1,340,000

2.

Date	General Journal	Debit	Credit
Jun-30	Sales revenue	$8,925,000
	Income Summary		$8,925,000
	( To close revenues)
Jun-30	Income Summary	$7,585,000
	Cost of Merchandise Sold		$5,620,000
	Sales Salaries Expense		$850,000
	Advertising Expense		$420,000
	Miscellaneous Selling Expense		$18,000
	Depreciation Expense—Store Equipment		$33,000
	Office Salaries Expense		$540,000
	Rent Expense		$48,000
	Insurance Expense		$24,000
	Depreciation Expense—Office Equipment		$10,000
	Office Supplies Expense		$4,000
	Miscellaneous Administrative Exp.		$6,000
	Interest expense		$12,000
	( To close expenses)
Jun-30	Income Summary	$1,340,000
	Gerri Faber, Capital		$1,340,000
	( To close income summary)
Jun-30	Gerri Faber, Capital	$300,000
	Gerri Faber, Drawing		$300,000
	( To close drawings)