Question

 

On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances:

Accounts	Debit				Credit
Cash	$	26,400
Accounts Receivable		48,800
Allowance for Uncollectible Accounts					$	5,500
Inventory		21,300
Land		59,000
Equipment		21,500
Accumulated Depreciation						2,800
Accounts Payable						29,800
Notes Payable (6%, due April 1, 2022)						63,000
Common Stock						48,000
Retained Earnings						27,900
Totals	$	177,000			$	177,000

During January 2021, the following transactions occur:

January		2		Sold gift cards totaling $10,600. The cards are redeemable for merchandise within one year of the purchase date.
January		6		Purchase additional inventory on account, $160,000.
January		15		Firework sales for the first half of the month total $148,000. All of these sales are on account. The cost of the units sold is $80,300.
January		23		Receive $126,700 from customers on accounts receivable.
January		25		Pay $103,000 to inventory suppliers on accounts payable.
January		28		Write off accounts receivable as uncollectible, $6,100.
January		30		Firework sales for the second half of the month total $156,000. Sales include $15,000 for cash and $141,000 on account. The cost of the units sold is $86,000.
January		31		Pay cash for monthly salaries, $53,300.

4. Prepare a multiple-step income statement for the period ended January 31, 2021.

Answer 1

ACME FIREWORKS
Income Statement
For the year ended January 31, 2021
Sales Revenue
On Jan. 15 Credit Sales	148,000.00
On Jan. 30 Cash Sales	15,000.00
On Jan. 30 Credit Sales	141,000.00
Total Sales Revenue		304,000.00
Less: Cost of Goods Sold:
On Jan. 15	80,300.00
On Jan. 30	86,000.00
Total Cost of Goods Sold		166,300.00
Gross Profit		137,700.00
Less: Operating Expenses:
Salaries	53,300.00
Interest Expense on Note	315.00
Total Operating Expenses		53,615.00
Net Operating Income		84,085.00