Question

The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 20Y7:

Cash	$92,000		Retained Earnings	$381,000
Accounts Receivable	450,000		Dividends	300,000
Inventory	370,000		Sales	8,925,000
Estimated Returns Inventory	5,000		Cost of Goods Sold	5,620,000
Office Supplies	10,000		Sales Salaries Expense	850,000
Prepaid Insurance	12,000		Advertising Expense	420,000
Office Equipment	220,000		Depreciation Expense—Store Equipment	33,000
Accumulated Depreciation—Office Equipment	58,000		Miscellaneous Selling Expense	18,000
Store Equipment	650,000		Office Salaries Expense	540,000
Accumulated Depreciation—Store Equipment	87,500		Rent Expense	48,000
Accounts Payable	38,500		Insurance Expense	24,000
Customers Refunds Payable	10,000		Depreciation Expense—Office Equipment	10,000
Salaries Payable	4,000		Office Supplies Expense	4,000
Note Payable (final payment due in 20 years)	140,000		Miscellaneous Administrative Exp.	6,000
Common Stock	50,000		Interest Expense	12,000

Required:

1. Prepare a multiple-step income statement.

Answer 1

Kanpur Co.
Income Statement
For the fiscal year ended June 30, 20Y7
Sales			8,925,000
Less: Cost of goods sold			5,620,000
Gross Profit			3,305,000
EXPENSES
Selling expenses
Sales salaries Expense	850,000
Advertising expenses	420,000
Depreciation on Store equipment	33,000
Miscellaneous expenses	18,000
Total selling expenses		1,321,000
Administrative expenses
Office salaries Expenses	540,000
Rent Expenses	48,000
Insurance expenses	24,000
Depreciation Expense—Office Equipment	10,000
Office supplies expenses	4,000
Miscellaneous Administrative Expenses	6,000
Total administrative expenses		632,000
Total operating expenses			1,953,000
Income from operations			1,352,000
Other expenses and incomes
Interest expenses			12,000
Net Income			1,340,000