Question

he following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2018:

Cash	$ 240,000
Accounts receivable	966,000
Inventory	1,690,000
Estimated returns inventory	22,500
Office supplies	13,500
Prepaid insurance	8,000
Office equipment	830,000
Accumulated depreciation-office equipment	550,000
Store equipment	3,600,000
Accumulated depreciation-store equipment	1,820,000
Accounts payable	326,000
Customer refunds payable	40,000
Salaries payable	41,500
Note payable (final payment due 2024)	300,000
Common stock	500,000
Retained earnings	2,949,100
Dividends	100,000
Sales	11,343,000
Cost of goods sold	7,850,000
Sales salaries expense	916,000
Advertising expense	550,000
Depreciation expense-store equipment	140,000
Miscellaneous selling expense	38,000
Office salaries expense	650,000
Rent expense	94,000
Depreciation expense-office equipment	50,000
Insurance expense	48,000
Office supplies expense	28,100
Miscellaneous administrative expense	14,500
Interest expense	21,000

	Required:
1.	Prepare a multiple-step income statement. In the Other income and expenses section only, enter amounts that represent other expenses as negative numbers using a minus sign.*
2.	Prepare a retained earnings statement. Negative amount should be indicated by the minus sign.*
3.	Prepare a balance sheet, assuming that the current portion of the note payable is $50,000.*
4.	Briefly explain how multiple-step and single-step income statements differ.

* Be sure to complete the statement headings. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required.

Prepare a retained earnings statement. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Negative amount should be indicated by the minus sign. A colon (:) will automatically appear if it is required.

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Score: 0/45

Clairemont Company

Retained Earnings Statement

Prepare a report form of balance sheet. Be sure to complete the statement heading. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Negative amount should be indicated by the minus sign.

Answer 1

		Claire mont Company
		Income Statement
		For the year ended May 31,2018
1)	Sales			$ 1,13,43,000.00
	Cost of Merchandise sold			$     78,50,000.00
	Gross Profit			$     34,93,000.00
	Expenses
	Selling Expenses:
	Sales Salaries Expenses	$    9,16,000.00
	Advertising Expense	$    5,50,000.00
	Depreciation Expense-Store Equipment	$    1,40,000.00
	Miscellaneous selling expense-Store Equipment	$       38,000.00
	Total Selling Expenses		$                                                      16,44,000.00
	Administrative Expenses
	Office Salaries Expense	$    6,50,000.00
	Rent Expense	$       94,000.00
	Depreciation Expense-Office Equipment	$       50,000.00
	Insurance Expense	$       48,000.00
	Office Supplies Expense	$       28,100.00
	Miscellaneous administrative expense	$       14,500.00
	Total Administrative Expenses		$                                                        8,84,600.00
	Total Operating expenses			$     25,28,600.00
	Income from operation			$       9,64,400.00
	Other Expense
	Interest Expense			$           21,000.00
	Net Income			$       9,43,400.00
		Clairemont Co.
2)		Statement of owner's equity
		For the year ended May 31st,2018
		Common Stock	Retained Earnings	Total
	Balance	$    5,00,000.00	$                                                      29,49,100.00	$     34,49,100.00
	Net Income for the year		$                                                        9,43,400.00	$       9,43,400.00
	Dividends		$                                                      -1,00,000.00	$      -1,00,000.00
	Balance May 31st2018	$    5,00,000.00	$                                                      37,92,500.00	$     42,92,500.00
		Clairemont Co.
3)		Balance Sheet
		May 31st,2018
	Assets:
	Current Assets:
	Cash		$                                                        2,40,000.00
	Accounts Receivable		$                                                        9,66,000.00
	Merchandise Inventory		$                                                      16,90,000.00
	Estimated returns Inventory		$                                                            22,500.00
	Office Supplies		$                                                            13,500.00
	Prepaid Insurance		$                                                              8,000.00
	Total Current Assets			$     29,40,000.00
	Property,Plant and Equipment
	Office Equipment	$    8,30,000.00
	Less: Accumulated Depreciation	$    5,50,000.00	$                                                        2,80,000.00
	Stores Equipment	$ 36,00,000.00
	Less: Accumulated Depreciation	$ 18,20,000.00	$                                                      17,80,000.00
	Total Property,Plant and Equipment			$     20,60,000.00
	Total Assets			$     50,00,000.00
	Liabilities:
	Accounts Payable		$                                                        3,26,000.00
	Customer Refunds Payable		$                                                            40,000.00
	Salaries Payable		$                                                            41,500.00
	Note Payable(Current Portion)		$                                                            50,000.00
	Total Current Liabilites			$       4,57,500.00
	Long Term Liabilites:
	Note Payable(Final payment due 2024)=($300000-$50000)			$       2,50,000.00
	Total Liabilites			$       7,07,500.00
	Owner's Equity & Retained Earnings			$     42,92,500.00
	Total liabilities and owner's equity			$     50,00,000.00
4)	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.