Question

	Windsor Corporation
	Trial Balance
	June 30, 2017
Accounts	Balance
Sales revenue	1,583,270
Sales discounts	31,410
Cost of goods sold	898,200
Salaries and wages expense (sales)	56,480
Sales commissions	98,010
Travel expense (salespersons)	34,800
Delivery expense	22,840
Entertainment expense	15,090
Telephone and Internet expense (sales)	9,070
Depreciation expense (sales equipment)	4,902
Maintenance and repairs expense (sales)	6,085
Miscellaneous selling expenses	4,920
Office supplies used	3,325
Telephone and Internet expense (administration)	2,748
Depreciation expense (office furniture and equipment)	6,832
Property tax expense	7,602
Bad debt expense (selling)	4,608
Maintenance and repairs expense (administration)	9,270
Office expense	6,040
Sales returns and allowances	58,411
Dividends received	41,560
Interest expense	17,500
Income tax expense	109,130
Depreciation understatement due to error—2014 (net of tax)	18,308
Dividends declared on preferred stock	9,790
Dividends declared on common stock	34,320
The Retained Earnings account had a balance of $339,770 at July 1, 2016.
There are 80,550 shares of common stock outstanding.
In the space below, prepare the following statements for the year ended June 30, 2017:
multiple-step income statement, single-step income statement, and statement of retained earnings

Answer 1

			Multi-step income statement
					$	$
	Net sales	(Note:1)				1493449
	Cost of goods sold					898200
	Gross profit					595249
	Administrative expenses			(Note:2)	35817
	Selling expenses			(Note:3)	256805	292622
	Income from operations					302627
	Other income and expenses:
	Dividend received				41560
	Interest expense				-17500	24060
	Income before taxes					326687
	Less: Income tax expenses					109130
	Income from continuing operations					217557
	Depreciation understatement due to error					-18308
	Net income			(a)		199249
	Common shares outstanding			(b)		80550
	Earnings per share			(a)/(b)		2.47
	Notes:
	1. Net sales
				$	$
	Sales revenue				1583270
	Less:
	Sales discounts			31410
	Sales returns			58411	89821
	Net sales				1493449
	2. Administrative expenses
					$
	Maintenance and repair expenses				9270
	Property tax expense				7602
	Telephone and interest expense				2748
	Depreciation of office equipment				6832
	Office supplies used				3325
	Office expenses				6040
	Total				35817
	3. Selling expenses
					$
	Sales salaries				56480
	Sales commission				98010
	Travelling expenses				34800
	Miscellaneous selling expenses				4920
	Delivery expense				22840
	Depreciation-Sales				4902
	Telephone				9070
	Maintenance and repair expenses				6085
	Entertainment expenses
	(Assumed to be sales related)				15090
	Baddebt expense				4608
	Total				256805
			Single step income statement
					$	$
	Revenues:
	Net sales	(Note:1)			1493449
	Dividend received				41560
						1535009
	Expenses:
	Cost of goods sold				898200
	Administrative expenses			(Note:2)	35817
	Selling expenses			(Note:3)	256805
	Interest expense				17500
	Income tax expenses				109130
	Depreciation understatement due to error				18308	1335760
	Net income					199249
	Note: Depreciation is understated in the year 2014.Now depreciation expense has to be provided and it will reduce net income.
		Statement of retained earnings
					$	$
	Beginning balance					339770
	Add: Net income					199249
						539019
	Less:
	Dividends declared on preferred stock				9790
	Dividends declared on common stock				34320	44110
	Ending balance					494909