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	$131,200		Gerri Faber, Drawing	$78,600
Accounts Receivable	349,900		Sales	4,744,500
Merchandise Inventory	398,900		Cost of Merchandise Sold	2,780,300
Estimated Returns Inventory	15,750		Sales Salaries Expense	781,800
Office Supplies	12,400		Advertising Expense	215,000
Prepaid Insurance	9,600		Depreciation Expense—Store Equipment	41,900
Office Equipment	288,800		Miscellaneous Selling Expense	18,300
Accumulated Depreciation—Office Equipment	196,300		Office Salaries Expense	426,800
Store Equipment	901,500		Rent Expense	63,000
Accumulated Depreciation—Store Equipment	288,800		Insurance Expense	19,500
Accounts Payable	199,800		Depreciation Expense—Office Equipment	31,500
Customer Refunds Payable	31,500		Office Supplies Expense	11,600
Salaries Payable	12,800		Miscellaneous Administrative Exp.	8,400
Note Payable (final payment due 2032)	420,000		Interest Expense	12,800
Gerri Faber, Capital	703,850

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 $16,800.

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?

Check My Work2 more Check

Answer 1

1.

Kanpur Co.
Income Statement
For the Year Ended June 30, 2019
Sales			4744500
Cost of goods sold			2780300
Gross profit			1964200
Expenses:
Selling expenses:
Sales salaries expense	781800
Advertising expense	215000
Depreciation expense-store equipment	41900
Miscellaneous selling expense	18300
Total selling expenses		1057000
Administrative expenses:
Office salaries expense	426800
Rent expense	63000
Insurance expense	19500
Depreciation expense-office equipment	31500
Office supplies expense	11600
Miscellaneous administrative expense	8400
Total administrative expenses		560800
Total operating expenses			1617800
Income from operations			346400
Other revenue and expense:
Interest expense			-12800
Net income			333600

2.

Kanpur Co.
Statement of Owner's Equity
For the Year Ended June 30, 2019
Gerri Faber, Capital, beginning balance	703850
Add: Net income for the year	333600
	1037450
Less: Gerri Faber, Drawing	78600
Gerri Faber, Capital, ending balance	958850

3.

Kanpur Co.
Balance Sheet
June 30, 2019
Assets
Current assets:
Cash		131200
Accounts receivable		349900
Merchandise inventory		398900
Estimated returns inventory		15750
Office supplies		12400
Prepaid insurance		9600
Total current assets			917750
Property, plant and equipment:
Office equipment	288800
Accumulated depreciation-office equipment	-196300	92500
Store equipment	901500
Accumulated depreciation-store equipment	-288800	612700
Total property, plant and equipment			705200
Total assets			1622950
Liabilities
Current liabilities:
Accounts payable	199800
Customer refunds payable	31500
Salaries payable	12800
Note payable (current portion)	16800
Total current liabilities		260900
Long-term liabilities:
Note payable		403200
Total liabilities			664100
Owner's equity
Gerri Faber, Capital			958850
Total liabilities and owner's equity			1622950

4. Multi-step income statement.