Question

Boutique shoppe Ltd. began operations two years ago. Its adjusted account balances on December 31, 2019, are listed below:

Account	Debit	Credit
Cash	$11,300
Merchandise inventory	46,000
Store supplies	18,900
Notes receivable	8,500
Store equipment	167,600
Accumulated depreciation, store equipment		49,000
Mortgage payable		54,000
Accounts payable		30,500
Sales		450,000
Sales discounts	14,000
Sales returns and allowances	8,000
Cost of goods sold	126,400
Sales salaries expense	105,200
Rent expense, selling space	25,000
Office supplies expenses	1,800
Rent expense, office space	65,000
Advertising expense	42,600
John Hogan, capital		58,800
John Hogan, withdrawals	2,000
Totals	$642,300	$642,300

9

Required

1. Prepare a classified multi-step income statement for the year ended December 31, 2019. .
2. Prepare a statement of changes in equity for the year ended December 31, 2019. .
3. Prepare a classified balance sheet as on December 31, 2019 based on the information provided. .

Answer 1

IncomeStatement
Sales revenue		4,50,000
Less: Sales discount		14,000
Less: Sales return and allowance	8,000
Net sales revenue			428000
Cost of goods sold			1,26,400
Gross Margin			3,01,600
Operating expense
Selling expense
Sales salaries expense	105200
Rent expense		25000
Advertising expense		42600
Total selling expense			172800
Admin expense:
Office supplies		1800
Rent expense		65000
Total admin expense			66800
Net Income			62000
Statement of Chnages in equity:
Beginning balance of capital	58,800
Add: Net Income		62000
Sub total			1,20,800
Less: Withdrawals		2000
Ending balance of capital	1,18,800
Balance Sheet
Assets
Current asets:
Cash			11300
Merchandise inventory	46000
Store supplies		18900
Notes receivable		8500
Total current assets			84700
Store equipment		167600
Less: Accum. Dep		49000	118600
Total Assets			203300
Liabilities and Equity
Liabilities:
Accounts payable		30500
Total current liabilities		30500
Long term liabilities
Mortgage payable			54000
Total Liabilities			84500
Owner's equity:
Owner's capital			118800
Total liabilities and equity		203300