Question

The following adjusted trial balance for Price Was Wrong, a retailer selling sports apparel, was prepared at the end of their year, November 30, 2015:

(Note: their year began December 1st of 2014, which is why the year ends November 30th)

	Account	Debit		Credit
101	Cash	$	7,500
119	Merchandise inventory		15,700
125	Supplies		9,500
128	Prepaid insurance		3,500
165	Store equipment		50,500
166	Accumulated depreciation, store equipment			$	46,300
167	Office equipment		68,500
168	Accumulated depreciation, office equipment				33,700
201	Accounts payable				15,500
301	Price Sox, capital				26,200
302	Price Sox, withdrawals		40,500
413	Sales				286,800
415	Sales discounts		1,500
505	Cost of goods sold		74,300
612	Depreciation expense, store equipment		4,700
613	Depreciation expense, office equipment		3,300
622	Sales salaries expense		45,500
623	Office salaries expense		31,500
637	Insurance expense, store		1,500
638	Insurance expense, office		1,350
640	Rent expense, office space		12,500
641	Rent expense, selling space		16,500
651	Office supplies expense		1,150
652	Store supplies expense		1,900
655	Advertising expense		17,100
	Totals	$	408,500	$	408,500

Required:

1.	Prepare a classified multiple-step income statement that would be used by the business’s owner.

    

Answer 1

Company Price Was Wrong
Income Statement
For the Year Ended November 30, 2015
Sales Revenue:
Total Sales	$286,800
− Sales Returns	−0
− Sales Discounts	−1,500
Net Sales Revenue		$285,300
Less:
Cost of Goods Sold		−74,300
Gross Profit		$211,000
Operating Expenses
Selling Expenses:
Sales salary expense	$45,500
Advertising Expense	17,100
Rental Expense selling space	16,500
Administrative Expenses:
Office Salaries Expense	31,500
Office Rent Expense	12,500
Office Supplies Expense	1,150
Other Expenses:
Insurance expense, office	1,350
Insurance expense, store              1,500
Store supplies expense	1,900
Depreciation expense:
Store Equipment	4,700
Office Equipment                        3,300 Total Operating Expenses		−137,000
Operating Income		$74,000
Net Other Incomes and Expenses		−0
Net Income		$74,000