In: Accounting
Multiple-Step Income Statement
On March 31, 20Y9, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture store, are as follows:
Accounts Receivable | $170,000 | Inventory | $1,019,950 | |
Accumulated Depreciation—Building | 762,600 | Notes Payable | 273,300 | |
Administrative Expenses | 559,700 | Office Supplies | 19,950 | |
Building | 2,619,300 | Retained Earnings | 1,337,850 | |
Cash | 166,750 | Salaries Payable | 7,900 | |
Common Stock | 291,750 | Sales | 6,440,950 | |
Cost of Goods Sold | 3,769,900 | Selling Expenses | 709,650 | |
Dividends | 172,550 | Store Supplies | 93,100 | |
Interest Expense | 10,150 |
a. Prepare a multiple-step income statement for the fiscal year ended March 31, 20Y9.
Royal Furnishings Company | ||
Income Statement | ||
For the Year Ended March 31, 20Y9 | ||
Sales | $ | |
Cost of goods sold | ||
Gross profit | $ | |
Expenses: | ||
Selling expenses | $ | |
Administrative expenses | ||
Total expenses | ||
Operating income | $ | |
Other expense: | ||
Interest expense | ||
Net income | $ |
2.
Beginning inventory, purchases, and sales for an inventory item are as follows:
Sep. 1 | Beginning Inventory | 24 | units | @ | $21 |
5 | Sale | 14 | units | ||
17 | Purchase | 26 | units | @ | $23 |
30 | Sale | 27 | units |
Assuming a perpetual inventory system and the first-in, first-out method:
a. Determine the cost of the goods sold for the
September 30 sale.
$
b. Determine the inventory on September
30.
$
3.
Asset turnover ratio
Financial statement data for years ended December 31, 20Y3 and 20Y2, for Edison Company follow:
20Y3 | 20Y2 | |||
Sales | $1,749,000 | $1,512,000 | ||
Total assets: | ||||
Beginning of year | 770,000 | 670,000 | ||
End of year | 820,000 | 770,000 |
a. | Determine the asset turnover ratio for 20Y3 and 20Y2. Round answers to one decimal place. |
20Y3 | 20Y2 | |||
Asset turnover |
b. | Is the change in the asset turnover ratio from 20Y2 to 20Y3 favorable or unfavorable? |
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