Question

Multiple-Step Income Statement and Report Form of Balance Sheet

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

Cash	$118,500		Retained Earnings	522,300
Accounts Receivable	318,800		Dividends	71,000
Inventory	360,200		Sales	$4,340,400
Estimated Returns Inventory	22,500		Cost of Goods Sold	2,510,600
Office Supplies	11,200		Sales Salaries Expense	706,000
Prepaid Insurance	8,600		Advertising Expense	194,100
Office Equipment	260,800		Depreciation Expense—    Store Equipment	37,800
Accumulated Depreciation—    Office Equipment	177,200		Miscellaneous Selling Expense	16,600
Store Equipment	814,100		Office Salaries Expense	385,400
Accumulated Depreciation—    Store Equipment	260,800		Rent Expense	56,900
Accounts Payable	180,500		Depreciation Expense—    Office Equipment	28,500
Customer Refunds Payable	40,000		Insurance Expense	17,600
Salaries Payable	11,500		Office Supplies Expense	10,400
Note Payable    (final payment due 2024)	380,000		Miscellaneous Administrative Exp.	7,600
Common Stock	56,000		Interest Expense	11,500

Required:

1. Prepare a multiple-step income statement.

Clairemont Co. Income Statement For the Year Ended May 31, 2018
Expenses:
Selling expenses:
Total selling expenses
Administrative expenses:
Total administrative expenses
Total operating expenses

2. Prepare a retained earnings statement.

Clairemont Co. Retained Earnings Statement For the Year Ended May 31, 2018

3. Prepare a balance sheet, assuming that the current portion of the note payable is $19,000.

Clairemont Co. Balance Sheet May 31, 2018
Assets
Current assets:
Total current assets
Property, plant and equipment:
Total property, plant and equipment
Total assets
Liabilities
Current liabilities:
Total current liabilities
Long-term liabilities:
Total liabilities
Stockholders' equity
Total stockholders' equity
Total liabilities and stockholders' equity

Answer 1

Solution: 1
	MULTIPLE STEP INCOME STATEMENT
	AS ON YEAR ENDED DEC 31. 2020
		Amount	Amount
	Revenue
	Sales		$          4,340,400
	Less: Cost of Goods Sold		$          2,510,600
	Gross Profit		$          1,829,800
	Less: Operating Expenses
	Sales Salaries & Expenses	$            706,000
	Advertising Expenses	$            194,100
	Depreciation expenses - Store Equipment	$               37,800
	Depreciation expenses - Office Equipment	$               28,500
	Office Salaries Expenses	$            385,400
	Rent Expenses	$               56,900
	Office Supplies Expenses	$               10,400
	Insurance Expenses	$               17,600
	Micllaneous Selling Expenses	$               16,600
	Micllaneous Admins Expenses	$                 7,600
	Total Operating Expenses		$          1,460,900
	Operating Income		$              368,900
	Non-Operating and others
	Interest Expenses		$              -11,500
	Net Income		$              357,400
Solution: 2
	Statement of Retained Earnings
		AMOUNT
	Beginning Balance	$            522,300
	Add: Net Income of the year	$            357,400
	Total	$            879,700
	Less: Dividends	$               71,000
	Ending balance	$            808,700
Solution: 3
	BALANCE SHEET
	ASSETS		AMOUNT	AMOUNT
	CURRENT ASSETS:
	Cash		$              118,500
	Account Receivable		$              318,800
	Inventory	$            360,200
	Add: Estimated Return Inventory	$               22,500	$              382,700
	Office Supplies		$                11,200
	Prepaid Insurance		$                  8,600
	Total Current Assets			$           839,800
	FIXED ASSETS:
	Office Equipment	$            260,800
	Less: Accumulated Depreciation - Office Equip.	$            177,200	$                83,600
	Stores Equipment	$            814,100
	Less: Accumulated Depreciation - Stores Equipm.	$            260,800	$              553,300
	Total Of Fixed Assets			$           636,900
	TOTAL OF ASSETS			$        1,476,700
	LIABILITIES & SHAREHOLDER'S EQUITY	AMOUNT	AMOUNT	AMOUNT
	CURRENT LIABILITIES:
	Account Payable		$              180,500
	Customer Refund Payable		$                40,000
	Salaries Payable		$                11,500
	Total of Currnet Liabilities			$           232,000
	LONG TERM LIABILITIES:
	Note Payable			$           380,000
	Shareholder's Equity
	Common Stock		$                56,000
	Retaine Earnings		$              808,700
	Total Stocholder's Equity			$           864,700
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