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	$114,200		Gerri Faber, Drawing	$68,400
Accounts Receivable	307,300		Sales	4,129,600
Merchandise Inventory	347,200		Cost of Merchandise Sold	2,420,000
Estimated Returns Inventory	13,700		Sales Salaries Expense	680,500
Office Supplies	10,800		Advertising Expense	187,100
Prepaid Insurance	8,300		Depreciation Expense—Store Equipment	36,500
Office Equipment	251,400		Miscellaneous Selling Expense	16,000
Accumulated Depreciation—Office Equipment	170,800		Office Salaries Expense	371,500
Store Equipment	784,700		Rent Expense	54,900
Accumulated Depreciation—Store Equipment	251,400		Insurance Expense	17,000
Accounts Payable	173,900		Depreciation Expense—Office Equipment	27,400
Customer Refunds Payable	27,400		Office Supplies Expense	10,100
Salaries Payable	11,100		Miscellaneous Administrative Exp.	7,300
Note Payable (final payment due 2032)	365,000		Interest Expense	11,100
Gerri Faber, Capital	616,200

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 $14,600.

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

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4

Multiple-step income statement shows intermediate balances

Explanation

Multiple-step income statement form contains various sections, subsections, and subtotals for revenues and expense. In the single-step form, total revenues and total expenses are emphasized in determining net income. In addition, gross profit and income from operations are not reported on the Single-Step form.