Exercise 5-27
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a.
Sales
Gross profit
Expenses:
Total expenses
Income from operations
Other revenue and expense:
Net income
b.
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Royal Furnishings Company
Income Statement
For the Year Ended March 31, 20Y9
Exercise 5-27
Instructions
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a.
Sales 8,245,000$
(5,500,000)
Gross profit 2,745,000$
Expenses:
575,000$
435,000
Total expenses (1,010,000)
Income from operations 1,735,000$
Other revenue and expense:
(15,000)
Net income 1,720,000$
b.
For the Year Ended March 31, 20Y9
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Solution
Section:
Scoring:
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Royal Furnishings Company
Income Statement
Cost of goods sold
Selling expenses
Administrative expenses
Interest expense
The major advantage of the multiple-step form of income statement is that relationships such as gross profit
to sales are indicated. The major disadvantages are that it is more complex and the total revenues and
expenses are not indicated, as is the case in the single-step income statement.
Score:
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Account Debit Credit
Mar. 2
2
3
3
4
4
5
5
12
14
14
16
Problem 5-2A
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Section:
Date
0%
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Instructions
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JOURNAL
16
18
18
19
19
19
26
28
31
31
April 3
15
Scoring:
Account Debit Credit
Mar. 2 Accounts Receivable – Equinox Co. 18,711
Sales 18,711
2 Cost of Goods Sold 13,300
Inventory 13,300
3 Cash 12,031
Sales 11,350
Sales Tax Payable 681
3 Cost of Goods Sold 7,000
Inventory 7,000
ON
Problem 5-2A
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Solution
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Date
Instructions
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JOURNAL
16 Cost of Goods Sold 16,000
Inventory 16,000
18 Customer Refunds Payable 4,752
Accounts Receivable – Targhee Co. 4,752
18 Inventory 2,900
Estimated Returns Inventory 2,900
19 Accounts Receivable – Vista Co. 8,085
Sales 8,085
19 Accounts Receivable – Vista Co. 75
Cash 75
19 Cost of Goods Sold 5,000
Inventory 5,000
26 Cash 22,473
Accounts Receivable – Targhee Co. 22,473
28 Cash 8,160
Accounts Receivable – Vista Co. 8,160
31 Cash 55,400
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Account Debit Credit
July 1
1
2
2
5
5
8
8
13
13
14
14
Problem 5-2B
Name:
Section:
JOURNAL
Date
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0%
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Instructions
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15
16
16
18
18
18
24
28
31
31
Aug. 3
10
Scoring:
Account Debit Credit
July 1 Accounts Receivable – Landscapes Co. 33,450
Sales 33,450
1 Cost of Goods Sold 20,000
Inventory 20,000
2 Cash 92,880
Sales 86,000
Sales Tax Payable 6,880
14 Accounts Receivable – Loeb Co. 15,840
Sales 15,840
ON
Problem 5-2B
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Solution
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Date
Instructions
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JOURNAL
15 Cash 17,325
Accounts Receivable – Peacock Company 17,325
16 Customer Refunds Payable 2,970
Accounts Receivable – Loeb Co. 2,970
16 Inventory 1,800
Estimated Returns Inventory 1,800
18 Accounts Receivable – Jennings Company 11,123
Sales 11,123
18 Accounts Receivable – Jennings Company 475
Cash 475
18 Cost of Goods Sold 6,800
Inventory 6,800
24 Cash 12,870
Accounts Receivable – Loeb Co. 12,870
28 Cash 11,598
Accounts Receivable – Jennings Company 11,598
Problem 5-5A
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Instructions
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1.
Sales
Cost of goods sold
Gross profit
Expenses:
Selling expenses:
Total selling expenses
Administrative expenses:
Total administrative expenses
Total operating expenses
Operating income
Other revenue and expense:
Net income
2.
Score:
0%
Name:
Section:
[Key code here]
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Clairemont Co.
Income Statement
Clairemont Co.
Statement of Stockholders’ Equity
Problem 5-5A
Instructions
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1.
Sales 11,343,000$
Cost of goods sold (7,850,000)
2.
Common
Stock
Retained
Earnings
Total
Balances, June 1, 20Y1 425,000$ 2,949,100$ 3,374,100$
75,000 – 75,000
– 943,400 943,400
– (100,000) (100,000)
Balances, May 31, 20Y2 500,000$ 3,792,500$ 4,292,500$
3.
Current assets:
Clairemont Co.
Name:
Solution
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Scoring:
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May 31, 20Y2
Income Statement
For the Year Ended May 31, 20Y2
Clairemont Co.
Statement of Stockholders’ Equity
For the Year Ended May 31, 20Y2
Issued common stock
Net income
Dividends
Clairemont Co.
Balance Sheet
Assets
Problem 5-5B
Score:
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Instructions
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1.
Sales
Cost of goods sold
Gross profit
Expenses:
Selling expenses:
Total selling expenses
Administrative expenses:
Total administrative expenses
Total expenses
Operating income
Other revenue and expense:
0%
Name:
Section:
[Key code here]
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Kanpur Co.
Income Statement
Net income
2.
Common
Stock
Retained
Earnings
Total
Balances, July 1, 20Y6
Balances, June 30, 20Y7
3.
Current assets:
Total current assets:
Property, plant, and equipment:
Office equipment
Store equipment
Total property, plant, and equipment
Total assets
Kanpur Co.
Statement of Stockholders’ Equity
Liabilities
Kanpur Co.
Balance Sheet
Assets
Current liabilities:
Total current liabilities:
Long-term liabilities:
Total liabilities
Common stock
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity
4.
(Enter essay answer here)
Stockholders’ Equity
Problem 5-5B
Instructions
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1.
Sales 8,925,000$
Cost of goods sold (5,620,000)
Gross profit 3,305,000$
Expenses:
Selling expenses:
Sales salaries expense 850,000$
Advertising expense 420,000
Depreciation expense—store equipment 33,000
Miscellaneous selling expense 18,000
Total selling expenses 1,321,000$
Administrative expenses:
Interest expense
Kanpur Co.
For the Year Ended June 30, 20Y7
7,500 – 7,500
– 1,340,000 1,340,000
– (300,000) (300,000)
Balances, June 30, 20Y7 50,000$ 1,421,000$ 1,471,000$
3.
Current assets:
92,000$
450,000
370,000
5,000
10,000
12,000
Total current assets: 939,000$
Property, plant, and equipment:
Office equipment 220,000$
For the Year Ended June 30, 20Y7
Name:
Solution
Section:
Scoring:
ON
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Kanpur Co.
Income Statement
Cash
Issued common stock
Net income
Dividends
Kanpur Co.
Balance Sheet
June 30, 20Y7
Assets
Accounts receivable
Inventory
Estimated returns inventory
Office supplies
Prepaid insurance
Total property, plant, and equipment 724,500
Total assets 1,663,500$
Current liabilities:
38,500$
10,000
7,000
Salaries payable 4,000
Total current liabilities: 59,500$
Long-term liabilities:
Note payable (long-term portion) 133,000
Total liabilities 192,500$
Common stock 50,000$
Retained earnings 1,421,000
Total stockholders’ equity 1,471,000
Total liabilities and stockholders’ equity 1,663,500$
4. a.
The multiple-step form of income statement contains various sections for revenues and expenses, with
intermediate balances, and concludes with net income. In the single-step form, the total of all expenses is
deducted from the total of all revenues. There are no intermediate balances.
Liabilities
Accounts payable
Customer refunds payable
Note payable (current portion)
Stockholders’ Equity
Problem 5-6A
Score:
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Instructions
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Enter a zero in cells you would otherwise leave blank.
1.
Sales
Expenses:
Total expenses
Net income
2.
Common
Stock
Retained
Earnings
Total
Balances, June 1, 20Y1
Balances, May 31, 20Y2
0%
Name:
Section:
[Key code here]
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Clairemont Co.
Income Statement
Clairemont Co.
Statement of Stockholders’ Equity
3.
Current assets:
Property, plant, and equipment:
Office equipment
Accumulated depreciation
Book value – office equipment
Store equipment
Accumulated depreciation
Book value – store equipment
Total property, plant, and equipment
Total assets
Current liabilities:
Long-term liabilities:
Total liabilities
Common stock
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity
Clairemont Co.
Balance Sheet
Assets
Total current assets:
Liabilities
Total current liabilities
Stockholders’ Equity