Question

Wolford Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2017, these accounts appeared in its adjusted trial balance.

Accounts Payable		$ 34,304
Accounts Receivable		22,016
Accumulated Depreciation—Equipment		87,040
Cash		10,240
Common Stock		44,800
Cost of Goods Sold		786,304
Freight-Out		7,936
Equipment		200,960
Depreciation Expense		17,280
Dividends		15,360
Gain on Disposal of Plant Assets		2,560
Income Tax Expense		12,800
Insurance Expense		11,520
Interest Expense		6,400
Inventory		33,536
Notes Payable		55,680
Prepaid Insurance		7,680
Advertising Expense		42,880
Rent Expense		43,520
Retained Earnings		18,176
Salaries and Wages Expense		149,760
Sales Revenue		1,157,120
Salaries and Wages Payable		7,680
Sales Returns and Allowances		25,600
Utilities Expense		13,568

Additional data: Notes payable are due in 2021.

Prepare a multiple-step income statement. (List other revenues before other expenses.)

Answer 1

Answer
Wolford Department Store
Income Statement
For the Year Ended November 30, 2017
Particulars	Amount
Revenues:
Sales revenue	$11,57,120
Sales returns and allowances	$    -25,600
Net sales	$11,31,520
Cost of goods sold	$ -7,86,304
Gross profit	$ 3,45,216
Operating expense:
Freight-out	$       7,936
Depreciation expense	$     17,280
Insurance expense	$     11,520
Advertising expense	$     42,880
Rent expense	$     43,520
Salaries and wages expense	$    1,49,760
Utilities expense	$     13,568
Total operating expenses	$ 2,86,464
Income from operations	$     58,752
Other income:
Gain on sale of investment	$       2,560
Interest expense	$      -6,400
Total other income	$      -3,840
Income before income taxes	$     54,912
Income tax expense	$     12,800
Net income/(loss)	$     42,112
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