Question

The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2018:

Cash	$ 245,100
Accounts receivable	971,100
Inventory	1,786,300
Estimated returns inventory	22,200
Office supplies	22,100
Prepaid insurance	7,600
Office equipment	839,400
Accumulated depreciation-office equipment	548,200
Store equipment	3,607,700
Accumulated depreciation-store equipment	1,816,600
Accounts payable	365,900
Customer refunds payable	33,200
Salaries payable	42,500
Note payable (final payment due 2024)	299,000
Common stock	496,400
Retained earnings	3,140,600
Dividends	98,800
Sales	11,256,200
Cost of goods sold	7,856,100
Sales salaries expense	907,500
Advertising expense	547,800
Depreciation expense-store equipment	144,800
Miscellaneous selling expense	31,700
Office salaries expense	664,600
Rent expense	84,400
Depreciation expense-office equipment	53,800
Insurance expense	56,200
Office supplies expense	24,100
Miscellaneous administrative expense	14,900
Interest expense	12,400

	Required:
1.	Prepare a multiple-step income statement. In the Other income and expenses section only, enter amounts that represent other expenses as negative numbers using a minus sign.*
2.	Prepare a retained earnings statement. Negative amount should be indicated by the minus sign.*
3.	Prepare a balance sheet, assuming that the current portion of the note payable is $58,000.*
4.	Briefly explain (a) how multiple-step and single-step income statements differ and (b) how report-form and account-form balance sheets differ.

* Be sure to complete the statement headings. Refer to the problem data and 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.

Labels
Administrative expenses
Current assets
Current liabilities
For the Year Ended May 31, 2018
Long-term liabilities
May 31, 2018
Operating expenses
Other revenue and expense
Property, plant, and equipment
Selling expenses
Amount Descriptions
Change in retained earnings
Gross profit
Income from operations
Dividends
Net income
Net income for the year
Net loss
Net loss for the year
Note payable (current portion)
Retained earnings, June 1, 2017
Retained earnings, May 31, 2018
Total administrative expenses
Total assets
Total current assets
Total current liabilities
Total liabilities
Total liabilities and stockholders’ equity
Total operating expenses
Total property, plant, and equipment
Total selling expenses
Total stockholders’ equity

Prepare a multiple-step income statement. Be sure to complete the statement heading. Refer to the problem data and 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. In the Other income and expenses section only, enter amounts that represent other expenses as negative numbers using a minus sign.

Clairemont Company

Income Statement

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Retained Earnings Statement

Prepare a retained earnings statement. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Negative amount should be indicated by the minus sign. A colon (:) will automatically appear if it is required.

Clairemont Company

Retained Earnings Statement

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Balance Sheet

Prepare a report form of balance sheet. Be sure to complete the statement heading. Refer to the problem data and 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. Negative amount should be indicated by the minus sign.

Clairemont Company

Balance Sheet

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Final Questions

Briefly explain (a) how multiple-step and single-step income statements differ and (b) how report-form and account-form balance sheets differ.

(a) Which type of income statement shows intermediate balances?

Single-step

Multiple-step

(b) Which type of balance sheet presents assets, liabilities, and stockholders’ equity in a downward sequence?

Report form

Account form

Answer 1