Question

Problem 4-4 The following account balances were included in the trial balance of Pronghorn Corporation at June 30, 2017. Sales revenue $1,589,330 Depreciation expense (office furniture and equipment) $6,697 Sales discounts 32,770 Property tax expense 7,616 Cost of goods sold 898,500 Bad debt expense (selling) 5,289 Salaries and wages expense (sales) 56,960 Maintenance and repairs expense (administration) 9,928 Sales commissions 99,050 Office expense 5,690 Travel expense (salespersons) 35,000 Sales returns and allowances 57,492 Delivery expense 22,220 Dividends received 35,470 Entertainment expense 15,060 Interest expense 16,220 Telephone and Internet expense (sales) 9,230 Income tax expense 101,760 Depreciation expense (sales equipment) 5,411 Depreciation understatement due to error—2014 (net of tax) 18,693 Maintenance and repairs expense (sales) 6,290 Dividends declared on preferred stock 8,770 Miscellaneous selling expenses 4,874 Dividends declared on common stock 33,790 Office supplies used 3,367 Telephone and Internet expense (administration) 2,676 The Retained Earnings account had a balance of $351,680 at July 1, 2016. There are 84,210 shares of common stock outstanding. Using the single-step form, prepare an income statement for the year ended June 30, 2017. Prepare a retained earnings statement for the year ended June 30, 2017.

Answer 1

Income statement
Particulars		Amount
Net sales		1,499,068
Dividends received		35,470
Gross income		1,534,538
Expenses:
Cost of goods sold		898,500
Selling expenses		244,324
Admistrative expenses		19,301
Other expenses		47,953
Income tax expense		101,760
Total expenses		1,311,838
Net income		222,700

Sales revenue		1,589,330
Less
Sales discounts		32,770
Sales returns and allowances		57,492
Net sales		1,499,068

Other expenses
Entertainment expense		15,060
Office supplies used		3,367
Property tax expense		7,616
Interest expense		16,220
Office expense		5,690
		47,953
Selling expenses
Salaries and wages expense (sales)		56,960
Sales commissions		99,050
Travel expense (salespersons)		35,000
Delivery expense		22,220
Telephone and Internet expense (sales)		9,230
Depreciation expense (sales equipment)		5,411
Maintenance and repairs expense (sales)		6,290
Miscellaneous selling expenses		4,874
Bad debt expense (selling)		5,289
		244,324

Administration expenses
Telephone and Internet expense (administration)		2,676
Depreciation expense (office furniture and equipment)		6,697
Maintenance and repairs expense (administration)		9,928
		19,301

Retained earnings
Particulars	Amount
Opening balance	351680
Opening balance adjustment - error correction	(18,693)
Adjusted opening balance	332987
Add net income	222,700
	555,687
Less
Dividends declared on preferred stock	8,770
Dividends declared on common stock	33,790
Closing balance	513,127