Question

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 31, 2019.

Racine Furnishings Company
Income Statement
For the Year Ended March 31, 2019
Sales		$
Cost of merchandise sold
Gross profit		$
Expenses:
Selling expenses	$
Administrative expenses
Total expenses
Income from operations		$
Other expense:
Interest expense
Net income		$

2.Cost of Merchandise Sold

Based on the following data, determine the cost of merchandise sold for November:

Increase in estimated returns inventory	$8,200
Merchandise inventory, November 1	13,700
Merchandise inventory, November 30	26,300
Purchases	273,900
Purchases returns and allowances	9,300
Purchases discounts	5,500
Freight in	3,800

3.Cost of Merchandise Sold

Based on the following data, determine the cost of merchandise sold for July:

Increase in estimated returns inventory	$27,200
Merchandise inventory, July 1	45,300
Merchandise inventory, July 31	87,000
Purchases	906,700
Purchases returns and allowances	30,800
Purchases discounts	18,100
Freight in	12,700

4.

Determining Amounts to be Paid on Invoices

Determine the amount to be paid in full settlement of each of the following invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period:

	Merchandise		Freight Paid by Seller				Customer Returns and Allowances
a.	$17,000		-			FOB destination, n/30	$900
b.	10,200		$400			FOB shipping point, 1/10, n/30	1,200
c.	5,500		-			FOB shipping point, 1/10, n/30	500
d.	4,400		200			FOB shipping point, 2/10, n/30	600
e.	1,300		-			FOB destination, 1/10, n/30

Answer 1

Question 1:-

The multiple step income statement for Racine Furnishings company for the year ended March 31, 2019 is as follows:-

Racine Furnishings Company
Multiple Step Income Statement
	Amount	Amount
Revenues
Sales	6,126,850
Less:- Cost of Merchandise sold	(3,965,850)
Gross Profit		2,161,000
Less - Expenses
Selling expenses	(717,650)
Administrative expenses	(545,700)
Total expenses		(1,263,350)
Income From Operations		897,650
Other Expense:- Interest expense		(9,550)
Net Income		888,100

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