Question

Multiple-Step Income Statement and Report Form of Balance Sheet

The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 2019:

Cash	$122,600		Gerri Faber, Drawing	$73,400
Accounts Receivable	332,700		Sales	4,431,600
Merchandise Inventory	372,600		Cost of Merchandise Sold	2,597,000
Estimated Returns Inventory	14,700		Sales Salaries Expense	730,300
Office Supplies	11,600		Advertising Expense	200,800
Prepaid Insurance	8,900		Depreciation Expense—Store Equipment	39,100
Office Equipment	269,800		Miscellaneous Selling Expense	17,100
Accumulated Depreciation—Office Equipment	183,300		Office Salaries Expense	398,700
Store Equipment	842,100		Rent Expense	58,900
Accumulated Depreciation—Store Equipment	269,800		Insurance Expense	18,300
Accounts Payable	186,700		Depreciation Expense—Office Equipment	29,400
Customer Refunds Payable	29,400		Office Supplies Expense	10,800
Salaries Payable	11,900		Miscellaneous Administrative Exp.	7,800
Note Payable (final payment due 2032)	392,500		Interest Expense	11,900
Gerri Faber, Capital	663,300

Required:

1. Prepare a multiple-step income statement.

Kanpur Co. Income Statement For the Year Ended June 30, 2019
Expenses:
Selling expenses:
Total selling expenses
Administrative expenses:
Total administrative expenses
Total operating expenses

2. Prepare a statement of owner's equity.

Kanpur Co. Statement of Owner's Equity For the Year Ended June 30, 2019

3. Prepare a balance sheet, assuming that the current portion of the note payable is $15,700.

Kanpur Co. Balance Sheet June 30, 2019
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
Owner's equity
Total liabilities and owner's equity

4. Which type of income statement shows intermediate balances?

Answer 1

1. Multiple-step income statement.
Kanpur Co.
Income Statement
For the Year Ended June 30, 2019
Sales			4431600
Cost of merchandise sold			2597000
Gross profit			1834600
Expenses:
Selling expenses:
Sales salaries expense	730300
Advertisement expense	200800
Depreciation expense-Store equipment	39100
Miscellaneous selling expense	17100
Total selling expenses		987300
Administrative expenses:
Office salaries expense	398700
Rent expense	58900
Insurance expense	18300
Depreciation expense-Office equipment	29400
Office supplies expense	10800
Miscellaneous administrative expenses	7800
Total administrative expenses		523900
Total operating expenses			1511200
Net operating income			323400
Other income/(expense)
Interest expense		-11900	-11900
			311500
2. Statement of owner's equity.
Kanpur Co.
Statement of Owner's Equity
For the Year Ended June 30, 2019
Balance as aon June 30, 2018		663300
Add: Net income for the year	311500
Less: Drawings	73400
		238100
Balance as on June 30, 2019		901400
3. Balance sheet, assuming that the current portion of the note payable is $15,700.
Kanpur Co.
Balance Sheet
June 30, 2019
Assets
Current assets:
Cash		122600
Accounts receivable		332700
Merchandize inventory		372600
Estimated returns inventory		14700
Office supplies		11600
Prepaid insurance		8900
Total current assets			863100
Property, plant and equipment:
Office equipment	269800
Accumulated depreciation-Office equipment	183300	86500
Store equipment	842100
Accumulated depreciation-Store equipment	269800	572300
Total property, plant and equipment			658800
Total assets			1521900
Liabilities
Current liabilities:
Accounts payable	186700
Customer refunds payable	29400
Salaries payable	11900
Note-Payable-Current portion	15700
Total current liabilities		243700
Long-term liabilities:
Note payable (392500-15700)		376800
Total liabilities			620500
Owner's equity			901400
Total liabilities and owner's equity			1521900
4. Which type of income statement shows intermediate balances?
Multistep income statement.