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	$128,300		Retained Earnings	565,500
Accounts Receivable	345,100		Dividends	76,800
Inventory	390,000		Sales	$4,699,500
Estimated Returns Inventory	22,500		Cost of Goods Sold	2,718,300
Office Supplies	12,100		Sales Salaries Expense	764,400
Prepaid Insurance	9,400		Advertising Expense	210,200
Office Equipment	282,400		Depreciation Expense—    Store Equipment	41,000
Accumulated Depreciation—    Office Equipment	191,900		Miscellaneous Selling Expense	17,900
Store Equipment	881,400		Office Salaries Expense	417,300
Accumulated Depreciation—    Store Equipment	282,400		Rent Expense	61,600
Accounts Payable	195,400		Depreciation Expense—    Office Equipment	30,800
Customer Refunds Payable	40,000		Insurance Expense	19,100
Salaries Payable	12,500		Office Supplies Expense	11,300
Note Payable    (final payment due 2024)	410,000		Miscellaneous Administrative Exp.	8,200
Common Stock	63,400		Interest Expense	12,500

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 $20,500.

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

4. a. Which type of income statement shows intermediate balances?

Answer 1

1

CLAIREMONT, CO.
INCOME STATEMENT
FOR THE YEAR ENDED MAY 31, 2018
Sales			$         4,699,500
Cost of merchandise sold			2,718,300
Gross profit			$         1,981,200
Expenses:
Selling expense:
Sales salaries expense	$     764,400
Advertising expense	210,200
Depreciation expense-store equipment	41,000
Miscellaneous selling expense	17,900
Total selling expenses		$     1,033,500
Administrative expenses:
Office salaries expense	$     417,300
Rent expense	61,600
Depreciation expense-office equipment	30,800
Insurance expense	19,100
Office supplies expense	11,300
Miscellaneous administrative expense	8,200
Total administrative expenses		548,300
Total operation expenses			1,581,800.00
Income from operations			$       399,400.00
Other expense:
Interest expense			(12,500)
Net Income			$            386,900

______________________________________________________

2

CLAIREMONT, CO.
STATEMENT OF OWNER'S EQUITY
FOR THE YEAR ENDED MAY 31, 2018
Kristina Marble, capital, June 1, 2017		$        565,500
Net income for the year	$     386,900
Less Devidend	76,800
Increase in owner's equity		310,100
Kristina Marble, capital, May 31,2018		$        875,600

__________________________________

3

CLAIREMONT, CO.
BALANCE SHEET
FOR THE YEAR ENDED MAY 31, 2018
Assets
Current assets:
Cash		$        128,300
Accounts receivable		345,100
Merchandise inventory		412,500
Office supplies		12,100
Prepaid insurance		9,400
Total current assets			$            907,400
Property, plant, and equipment:
Store equipment	$     881,400
Less accumulated depreciation	282,400	$        599,000
Office equipment	282,400
Less accumulated depreciation	191,900	90,500
Total property, plant, and equipment			$            689,500
Total assets			$         1,596,900
Liabilities
Current liabilities:
Accounts payable		195,400
Note payable (current portion)		40,000
Salaries payable		12,500
Total current liabilities			$            247,900
Long-term liabilities:
Nota payable (due in 2022 years)			410,000
Total liabilities			$            657,900
Owner's Equity
Kristina Marble, capital
Common stock	63400
Retained Earning	$     875,600		939,000
Total liabilities and owner's equity			$         1,596,900

4

Which type of income statement shows intermediate balances

Answer: Multistep income statement