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Problem 5-5A Simon Company SIMON COMPANY Income Statement For the Year Ended December 31, 2017 289 289
Product Description
Problem 5-5A Simon Company SIMON COMPANY Income Statement For the Year Ended December 31, 2017 289 289
Preparing a Multiple‐Step Income Statement
Purpose of Assignment
The purpose of this assignment is to help you become familiar with the parts of the multiple‐step incomestatement.
Assignment Steps
Resources: Financial Accounting: Tools for Business Decision Making
Scenario: An inexperienced accountant prepared this condensed income statement for SimonCompany, a retail firm that has been in business for a number of years.
|
SIMON COMPANY Income Statement |
|
|
Revenues |
|
|
Net sales |
$850,000 |
|
Other revenues |
22,000 |
|
|
872,000 |
|
Cost of goods sold |
555,000 |
|
Gross profit |
317,000 |
|
Operating expenses |
|
|
Selling expenses |
109,000 |
|
Administrative expenses |
103,000 |
|
|
212,000 |
|
Net earnings |
$105,000 |
As an experienced, knowledgeable accountant, you review the statement and determine the followingfacts:
1. Net sales consist of: sales $911,000, less freight-out on merchandise sold $33,000, and sales returns and allowances$28,000.
2. Other revenues consist of sales discounts $18,000 and rent revenue $4,000.
3. Selling expenses consist of salespersons' salaries $80,000, depreciation on equipment $10,000, advertising $13,000, and sales commissions $6,000. The commissions represent commissions paid. At December 21, $3,000 ofcommissions have been earned by salespersons but have not been paid. All compensation should be recorded asSalaries and Wages Expense.
4. Administrative expenses consist of office salaries $47,000, dividends $18,000, utilities $12,000, interest expense$2,000, and rent expense $24,000, which includes prepayments totaling $6,000 for the first quarter of 2018.
Prepare a detailed multi-step income statement with a brief explanation of 700 words. Assume a 25% tax rate.
Show your work on the Excel® spreadsheet and submit with your explanation
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08 Sep 2017
Due Date: 08 Sep 2017
Answers
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