Question

The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2018:

Cash	$ 245,100
Accounts receivable	971,100
Inventory	1,786,300
Estimated returns inventory	22,200
Office supplies	22,100
Prepaid insurance	7,600
Office equipment	839,400
Accumulated depreciation-office equipment	548,200
Store equipment	3,607,700
Accumulated depreciation-store equipment	1,816,600
Accounts payable	365,900
Customer refunds payable	33,200
Salaries payable	42,500
Note payable (final payment due 2024)	299,000
Common stock	496,400
Retained earnings	3,140,600
Dividends	98,800
Sales	11,256,200
Cost of goods sold	7,856,100
Sales salaries expense	907,500
Advertising expense	547,800
Depreciation expense-store equipment	144,800
Miscellaneous selling expense	31,700
Office salaries expense	664,600
Rent expense	84,400
Depreciation expense-office equipment	53,800
Insurance expense	56,200
Office supplies expense	24,100
Miscellaneous administrative expense	14,900
Interest expense	12,400

	Required:
1.	Prepare a multiple-step income statement. In the Other income and expenses section only, enter amounts that represent other expenses as negative numbers using a minus sign.*
2.	Prepare a retained earnings statement. Negative amount should be indicated by the minus sign.*
3.	Prepare a balance sheet, assuming that the current portion of the note payable is $58,000.*
4.	Briefly explain (a) how multiple-step and single-step income statements differ and (b) how report-form and account-form balance sheets differ.

* Be sure to complete the statement headings. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. * Be sure to complete the statement headings. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Labels and Amount Descriptions Labels Administrative expenses Current assets Current liabilities For the Year Ended May 31, 2018 Long-term liabilities May 31, 2018 Operating expenses Other revenue and expense Property, plant, and equipment Selling expenses Amount Descriptions Change in retained earnings Gross profit Income from operations Dividends Net income Net income for the year Net loss Net loss for the year Note payable (current portion) Retained earnings, June 1, 2017 Retained earnings, May 31, 2018 Total administrative expenses Total assets Total current assets Total current liabilities Total liabilities Total liabilities and stockholders’ equity Total operating expenses Total property, plant, and equipment Total selling expenses Total stockholders’ equity

Answer 1

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Income Statement
Sales			$ 11,256,200
Cost of goods sold			$   7,856,100
Gross Margin			$   3,400,100
Less: Operating Expenses:
Selling Expenses:
Sales salaries expense	$           907,500
Advertising expense	$           547,800
Depreciation expense-store equipment	$           144,800
Miscellaneous selling expense	$             31,700
Total Selling Expenses		$       1,631,800
Administrative Expenses:
Office salaries expense	$           664,600
Rent expense	$             84,400
Depreciation expense-office equipment	$             53,800
Insurance expense	$             56,200
Office supplies expense	$             24,100
Miscellaneous administrative expense	$             14,900
Total Administrative Expenses		$           898,000
Total Operating Expenses			$   2,529,800
Net Operating Income			$       870,300
Less: Interest Expenses			$        -12,400
Net Income			$       857,900
Retained Earning Statement
Beginning Balance		$       3,140,600
Add: Net Income		$           857,900
Less: Dividends		$            -98,800
Ending Balance of Retained earning		$       3,899,700
Balance Sheet
Assets
Current Assets:
Cash	$           245,100
Accounts receivable	$           971,100
Inventory	$       1,786,300
Estimated returns inventory	$             22,200
Office supplies	$             22,100
Prepaid insurance	$                7,600
Total Current Assets		$       3,054,400
Property, Plant and Equipment:
Office equipment	$           839,400
Accumulated depreciation-office equipment	$         -548,200
Office Equipment, Net		$           291,200
Store equipment	$       3,607,700
Accumulated depreciation-store equipment	$      -1,816,600
Store Equipment, Net		$       1,791,100
Total Assets			$   5,136,700
Liabilities
Current Liabilities:
Accounts payable	$           365,900
Customer refunds payable	$             33,200
Salaries payable	$             42,500
Current portion of Note Payable	$             58,000
Total Current Liabilities:		$           499,600
Note payable (final payment due 2024)		$           241,000
Total Liabilities			$       740,600
Sharesholder'S Equity
Common stock		$           496,400
Retained earnings		$       3,899,700
Total Sharesholder Equity			$   4,396,100
Total Liabilities and Equity			$   5,136,700