Question

Multi-Step Statement, Retained Earnings Statement, Periodic Inventory
						Presented below is the trial balance of Thompson Corporation at December 31, 2017.
		THOMPSON CORPORATION
		Trial Balance
		December 31, 2017
			Debit	Credit
		Purchase Discounts		$15,000
		Cash	$194,700
		Accounts Receivable	110,000
		Rent Revenue		28,000
		Retained Earnings		165,000
		Salaries and Wages Payable		23,000
		Sales Revenue		1,105,000
		Notes Receivable	115,000
		Accounts Payable		54,000
		Accumulated Depreciation—Equipment		33,000
		Sales Discounts	19,500
		Sales Returns and Allowances	22,500
		Notes Payable		85,000
		Selling Expenses	237,000
		Administrative Expenses	104,000
		Common Stock		310,000
		Income Tax Expense	58,900
		Cash Dividends	50,000
		Allowance for Doubtful Accounts		10,000
		Supplies	19,000
		Freight-In	25,000
		Land	75,000
		Equipment	145,000
		Bonds Payable		100,000
		Gain on Sale of Land		35,000
		Accumulated Depreciation - Buildings		24,600
		Inventory	94,000
		Buildings	103,000
		Purchases	615,000
		Totals	$1,987,600	$1,987,600
A physical count of inventory on December 31 resulted in an inventory amount of $55,000; Calculate COGS for your statement using the formula to calculate COGS.
Instructions
Prepare a multi-step income statement and a retained earnings statement. Assume that the only changes in retained earnings during the current year were from net income and dividends. Thirty thousand shares of common stock were outstanding the entire year.

Answer 1

THOMPSON CORPORATION
Multi step Income Statement
For the year ended December 31, 2017
Revenues
Sales	$ 1,105,000
Less: Sales returns and allowances	$     (22,500)
Less: Sales discounts	$     (19,500)
Net sales		$ 1,063,000
Less: Cost of goods sold
Merchandise inventory, January 1, 2017	$        94,000
Add: Purchases	$     615,000
Less: Purchase discounts	$     (15,000)
Add: freight in	$        25,000
Less: Merchandise inventory, December 31, 2017	$     (55,000)
Cost of goods sold		$     664,000
Gross profit		$     399,000
Less: Operating expenses
Selling expenses	$     237,000
Administrative expense	$     104,000
Total operating expense		$     341,000
Income from operations		$        58,000
Non operating income and (expenses)
Rent revenue	$        28,000
Gain on sale of land	$        35,000
Total Non operating income and (expenses)		$        63,000
Income before income tax		$     121,000
Income tax expenses		$        58,900
Net income		$        62,100

THOMPSON CORPORATION
Statement of retained earnings
For the year ended December 31, 2017
Retained earnings, Beginning balance	$ 165,000
Add: Net income	$    62,100
	$ 227,100
Less: Dividends	$ (50,000)
Retained earnings, Ending balance	$ 177,100

You can reach me over comment box if you have any doubts. Please rate this answer