On March 31, 20Y9, the balances of the accounts appearing in the ledger of Royal Furnishings...

On March 31, 20Y9, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture store, are as follows:

Accounts Receivable	$ 170,000
Accumulated Depreciation-Building	750,000
Administrative Expenses	435,000
Building	3,500,000
Cash	80,000
Common Stock	300,000
Cost of Goods Sold	5,500,000
Dividends	175,000
Interest Expense	15,000
Inventory	980,000
Notes Payable	250,000
Office Supplies	20,000
Retained Earnings	1,987,000
Salaries Payable	8,000
Sales	8,245,000
Selling Expenses	575,000
Store Supplies	90,000

Prepare a multiple-step income statement for the fiscal year ended March 31, 20Y9. Be sure to complete the statement heading. Refer to the information given in the exercise and to 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. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

What is a major advantage of the multiple-step income statement over the single-step income statement?

a. The multiple-step income statement clearly presents the value of total expenses.

b. The multiple-step income statement shows the relationship of gross profit to sales.

c. The multiple-step income statement clearly presents the value of total revenues.

d. The multiple-step income statement is less complex to prepare.

Solutions

Expert Solution

Requirement 1:

Royal Furnishings Company
Income statement (multi-step)
For the year ended March 31, 20Y9
Sales		$ 8,245,000
Cost of goods sold		($ 5,500,000)
Gross profit		$ 2,745,000
Operating expenses:
Administrative expense	$ 435,000
Selling expense	$ 575,000
Total operating expenses		$ 1,010,000
Operating income		$ 1,735,000
Other revenues and expenses:
Interest expense		$ 15,000
Net income		$ 1,720,000

Requirement 2:

Answer: Option b) The multiple-step income statement shows the relationship of gross profit to sales.

Explanation:

A major advantage of the multiple-step income statement over the single-step income statement is the multiple-step income statement shows the relationship of gross profit to sales. In single-step we does not show the sales and gross profit relation but, in multiple-step income statement its shows all expenses also in different heads.

The value of total expenses clearly presents not only in multiple-step income statement but also in single-step income statement.
The value of total revenues clearly presents not only in multiple-step income statement but also in single-step income statement.
The multiple-step income statement is not a less complex to prepare

Thus, the option b) is correct and remaining options are incorrect.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

1.On March 31, 2019, the balances of the accounts appearing in the ledger of Racine Furnishings...

1.On March 31, 2019, the balances of the accounts appearing in the ledger of Racine Furnishings Company, a furniture wholesaler, are as follows: Accumulated Depreciation—Building $747,950 Merchandise Inventory $939,850 Administrative Expenses 545,700 Notes Payable 240,200 Building 2,416,650 Office Supplies 20,650 Cash 180,250 Salaries Payable 7,700 Cost of Merchandise Sold 3,965,850 Sales 6,126,850 Interest Expense 9,550 Selling Expenses 717,650 Kathy Melman, Capital 1,545,600 Store Supplies 87,000 Kathy Melman, Drawing 181,750 a. Prepare a multiple-step income statement for the year ended March...

Multiple-Step Income Statement On March 31, 20Y9, the balances of the accounts appearing in the ledger...

Multiple-Step Income Statement On March 31, 20Y9, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture store, are as follows: Accounts Receivable $170,000 Inventory $1,019,950 Accumulated Depreciation—Building 762,600 Notes Payable 273,300 Administrative Expenses 559,700 Office Supplies 19,950 Building 2,619,300 Retained Earnings 1,337,850 Cash 166,750 Salaries Payable 7,900 Common Stock 291,750 Sales 6,440,950 Cost of Goods Sold 3,769,900 Selling Expenses 709,650 Dividends 172,550 Store Supplies 93,100 Interest Expense 10,150 a. Prepare a multiple-step income statement...

Multiple-Step Income Statement On March 31, 20Y9, the balances of the accounts appearing in the ledger...

Multiple-Step Income Statement On March 31, 20Y9, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture store, are as follows: Accounts Receivable $170,000 Inventory $932,650 Accumulated Depreciation—Building 773,900 Notes Payable 287,550 Administrative Expenses 519,200 Office Supplies 20,300 Building 2,581,250 Retained Earnings 1,331,300 Cash 167,000 Salaries Payable 8,200 Common Stock 307,150 Sales 6,474,250 Cost of Goods Sold 3,924,850 Selling Expenses 698,700 Dividends 175,250 Store Supplies 86,500 Interest Expense 10,100 a. Prepare a multiple-step income statement...

Multiple-Step Income Statement On March 31, 20Y4, the balances of the accounts appearing in the ledger...

Multiple-Step Income Statement On March 31, 20Y4, the balances of the accounts appearing in the ledger of Danns Furnishings Company, a furniture wholesaler, are as follows: Accumulated Depreciation—Building $719,700 Merchandise Inventory $990,300 Administrative Expenses 556,350 Notes Payable 255,350 Building 2,574,200 Office Supplies 19,750 Cash 181,050 Salaries Payable 7,900 Cost of Merchandise Sold 3,855,900 Sales 6,304,000 Interest Expense 9,900 Selling Expenses 709,950 Kathy Melman, Capital 1,620,550 Store Supplies 89,700 Kathy Melman, Drawing 176,150 a. Prepare a multiple-step income statement for the...

Multiple-Step Income Statement On March 31, 20Y5, the balances of the accounts appearing in the ledger...

Multiple-Step Income Statement On March 31, 20Y5, the balances of the accounts appearing in the ledger of Lange Daughters Inc. are as follows: Administrative Expenses $ 950,000 Inventory $ 800,000 Accumulated Dep. - Building 4,000,000 Notes Payable 900,000 Building 19,000,000 Office Supplies 50,000 Common Stock 1,000,000 Retained Earnings 12,365,000 Cash 2,970,000 Sales 17,850,000 Cost of Goods Sold 10,350,000 Selling Expenses 1,650,000 Dividends 200,000 Store Supplies 150,000 Interest Expense 45,000 a. Prepare a multiple-step income statement for the year ended March...

Multiple-Step Income Statement On March 31, 2018, the balances of the accounts appearing in the ledger...

Multiple-Step Income Statement On March 31, 2018, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture wholesaler, are as follows: Accounts Receivable $170,000 Inventory 987,550 Accumulated Depreciation—Building 737,500 Notes Payable 305,250 Administrative Expenses 520,750 Office Supplies 20,700 Building 2,515,100 Retained Earnings 1,278,950 Cash 169,050 Salaries Payable 7,950 Common Stock 314,050 Sales 6,187,800 Cost of Goods Sold 3,714,250 Selling Expenses 689,250 Dividends 171,850 Store Supplies 91,600 Interest Expense 9,600 a. Prepare a multiple-step income statement...

On July 31, 20Y7, the balances of the accounts appearing in the ledger of Yang Interiors...

On July 31, 20Y7, the balances of the accounts appearing in the ledger of Yang Interiors Company, a furniture wholesaler, are as follows: Accumulated Depreciation-Building $443,000 Administrative Expenses 534,000 Building 984,000 Cash 95,000 Cost of Merchandise Sold 941,000 Interest Expense 7,000 Merchandise Inventory 140,000 Notes Payable 121,000 Peter Bronsky, Capital 644,000 Peter Bronsky, Drawing 18,000 Sales 1,745,000 Sales Tax Payable 4,500 Selling Expenses 194,000 Store Supplies 19,000 Store Supplies Expense 25,500 Required: Prepare the July 31, 20Y7, closing entries for...

The ledger of Metlock, Inc. on March 31 of the current yearincludes the selected accounts...

The ledger of Metlock, Inc. on March 31 of the current year includes the selected accounts below before adjusting entries have been prepared.DebitCreditSupplies$3,900Prepaid Insurance4,680Equipment32,500Accumulated Depreciation—Equipment$10,920Notes Payable26,000Unearned Rent Revenue16,120Rent Revenue78,000Interest Expense0Salaries and Wages Expense18,200An analysis of the accounts shows the following.1.The equipment depreciates $364 per month.2.Half of the unearned rent revenue was earned during the quarter.3.Interest of $520 is accrued on the notes payable.4.Supplies on hand total $1,105.5.Insurance expires at the rate of $520 per month.Prepare the adjusting entries at March...

The balances of the ledger accounts for Oleman Services on January 31, 2019, and the information...

The balances of the ledger accounts for Oleman Services on January 31, 2019, and the information needed for adjustments are shown below. Account Name Balance Cash $ 6,500 Accounts Receivable 3,500 Supplies 1,200 Prepaid Insurance 3,000 Equipment 7,500 Accumulated Depreciation–Equipment − Accounts Payable 3,400 Jeff Oleman, Capital 17,500 Jeff Oleman, Drawing 1,500 Fees Income 9,500 Advertising Expense 600 Rent Expense 1,200 Salaries Expense 5,000 Supplies Expense − Insurance Expense − Utilities Expense 400 Depreciation Expense–Equipment − Adjustment information:...

The ledger of Novak Corp. on March 31 of the current year includes the selected accounts...

The ledger of Novak Corp. on March 31 of the current year includes the selected accounts below before adjusting entries have been prepared. Debit Credit Supplies $8,400 Prepaid Insurance 10,080 Equipment 70,000 Accumulated Depreciation—Equipment $23,520 Notes Payable 56,000 Unearned Rent Revenue 34,720 Rent Revenue 168,000 Interest Expense 0 Salaries and Wages Expense 39,200 An analysis of the accounts shows the following. 1. The equipment depreciates $784 per month. 2. Half of the unearned rent revenue was earned during the quarter....

Subjects