Question

The following is a list of the accounts and balances taken from the adjusted trial balance at December 31, 2021 for, Meilleur Merchants. The list of accounts is in alphabetical order. All accounts have normal balances.

Meilleur uses a periodic inventory system and the earnings approach to recognize revenue.

		Account		Balance Dec. 31
1		Accounts payable		$15,000
2		Accounts receivable		30,000
3		Accumulated depreciation—building		15,500
4		Accumulated depreciation—equipment		10,000
5		Advertising expense		4,500
6		Building		84,600
7		S. Meilleur, capital		75,000
8		S. Meilleur, drawings		28,300
9		Cash		10,480
10		Depreciation expense		6,200
11		Equipment		24,500
12		Freight in		3,200
13		Freight out		640
14		Insurance expense		1,250
15		Interest expense		1,720
16		Interest revenue		1,440
17		Land		12,000
18		Merchandise inventory, beginning		90,200
19		Mortgage payable		57,600
20		Prepaid insurance		2,100
21		Property tax expense		1,100
22		Property taxes payable		600
23		Purchase discounts		6,300
24		Purchase returns and allowances		14,600
25		Purchases		268,100
26		Rent revenue		1,500
27		Salaries expense		40,400
28		Salaries payable		650
29		Sales		423,100
30		Sales discounts		15,400
31		Sales returns and allowances		17,800
32		Unearned revenue		23,000
33		Utilities expense		1,800

Additional information: According to the year-end physical count, the merchandise inventory had a balance of $104,700.

Prepare a multiple-step income statement for Meilleur Merchants for the year ended December 31, 2021.

Answer 1

Meilleur Merchants
multi-step Income statement
For the Year Ended December 31, 2021
Revenues
Sales revenue	$   423,100
less: Sales discounts	$   (15,400)
Less: Sales returns and allowances	$   (17,800)
Net sales		$   389,900
Less: Cost of goods sold
Beginning inventory	$     90,200
Add: Purchases	$   268,100
Less: Purchase discounts	$     (6,300)
less: Purchase returns and allowances	$   (14,600)
Add: Freight in	$       3,200
Cost of goods available for sale	$   340,600
Less: Ending inventory	$   104,700
cost of goods sold		$   235,900
gross profit		$   154,000
Operating expenses
Advertising expense	$       4,500
Depreciation expense	$       6,200
Freight out	$           640
Insurance expense	$       1,250
Property tax expense	$       1,100
Salaries expense	$     40,400
Utilities expense	$       1,800
Total operating expenses		$     55,890
Operating income		$     98,110
Non-Operating items
Interest revenue	$       1,440
Rent revenue	$       1,500
Interest expenses	$     (1,720)
Total non operating items		$       1,220
Net income		$     99,330

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