Question

The following selected accounts and their current balances appear in the ledger of Druid Hills Co. for the fiscal year ended May 31, 20Y8:

Cash	$244,200
Accounts Receivable	956,700
Merchandise Inventory	1,612,700
Office Supplies	16,400
Prepaid Insurance	2,400
Office Equipment	820,100
Accumulated Depreciation-Office Equipment	549,000
Store Equipment	3,602,400
Accumulated Depreciation-Store Equipment	1,826,800
Accounts Payable	363,800
Customer Refunds Payable	48,500
Salaries Payable	45,100
Note Payable*	307,000
Kristina Marble, Capital	3,358,400
Kristina Marble, Drawing	103,300
Sales	11,271,800
Cost of Merchandise Sold	7,851,700
Sales Salaries Expense	914,200
Advertising Expense	541,800
Depreciation Expense-Store Equipment	138,200
Miscellaneous Selling Expense	34,100
Office Salaries Expense	656,600
Rent Expense	86,800
Depreciation Expense-Office Equipment	55,000
Insurance Expense	54,800
Office Supplies Expense	30,700
Miscellaneous Administrative Expense	17,400
Interest Expense	30,900
*final payment due in 10 years

	Required:
1.	Prepare a multiple-step income statement.*
2.	Prepare a statement of owner’s equity.*
3.	Prepare a balance sheet, assuming that the current portion of the note payable is $53,200.*
4.	How multiple-step and single-step income statements differ.

*Be sure to read the instructions for each financial statement carefully.

Labels and Amount Descriptions

Labels
Current assets
Current liabilities
For the Year Ended May 31, 20Y8
Long-term liabilities
May 31, 20Y8
Expenses
Other revenue and expense
Property, plant, and equipment
Amount Descriptions
Gross profit
Income from operations
Increase in owner’s equity
Kristina Marble, capital, June 1, 20Y7
Kristina Marble, capital, May 31, 20Y8
Withdrawals
Net income
Net loss
Total administrative expenses
Total assets
Total current assets
Total current liabilities
Total liabilities
Total liabilities and owner’s equity
Total operating expenses
Total property, plant, and equipment
Total selling expenses

Income Statement

1. Prepare a multiple-step income statement. Be sure to complete the statement heading. Refer to the account names in the instructions and the lists of Labels and Amount Descriptions for the exact wording of text entries. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. A colon (:) will automatically appear if it is required.

Druid Hills Co.

Income Statement

1
2
3
4
5	Selling expenses:
6
7
8
9
10
11	Administrative expenses:
12
13
14
15
16
17
18
19
20
21
22
23

Statement of Owner’s Equity

2. Prepare a statement of owner’s equity. Be sure to complete the statement heading. Refer to the lists of Labels and Amount Descriptions for the exact wording of text entries. Enter amounts that represent reduction as negative numbers using a minus sign.

Druid Hills Co.

Statement of Owner’s Equity

1
2
3
4
5

Balance Sheet

3. Prepare a balance sheet, assuming that the current portion of the note payable is $53,200. Be sure to complete the statement heading. Refer to the account names in the instructions and the lists of Labels and Amount Descriptions for the exact wording of text entries. Order the Property, Plant & Equipment accounts in the order shown on the Instructions page. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary. Enter all amounts as positive numbers.

Druid Hills Co.

Balance Sheet

1	Assets
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16	Liabilities
17
18
19
20
21
22
23
24
25
26	Owner’s Equity
27
28

Final Questions

4. How multiple-step and single-step income statements differ.

Which type of income statement shows intermediate balances?

Single-step

Multiple-step

Answer 1