Question

Problem 4-28A Preparing a schedule of cost of goods sold and multistep and single-step income stat ements: Periodic system (Appendix) T he follo wing acco unt t itles and bala nces were taken from the adju sted trial bala nce of Scogg ins Sa les Co. at D ece mbe r 31, 20 11 . T he co mpa ny uses the period ic invento ry met hod. Accounting Account TIiie Advertising expense Interest expense Merchandise inventory,January 1 Merchandise inventory, December 31 Misce ll aneous expense Purchases Purchase returnsandallowances Rent expense Salaries expense Sales Sales returns and all owances Transportationi-n Transportation-out Gain on sale of land Utilities expense Balance $10,400 5,000 18,000 20,100 800 150,000 2,700 18,000 53,000 320,000 8,000 6,200 10,800 4,000 11,200 Required a. Prepa re a schedu le to de te rmi ne the amount of cost of goods sold. b. Prepa re a mu ltis te p inco me state ment. c. Pre pare a single -s tep in co

me state ment.

Answer 1

Requirement a: Schedule to determine the cost of goods sold

Scoggins Sales Co.
Cost of goods sold
For the year ended Dec 31,2011
Merchandise inventory, Jan 1		$18,000
Purchases	$150,000
Purchase returns and allowances	($2,700)	$147,300
Transportation-in		$6,200
Cost of goods available for sale		$171,500
(Less): Merchandise inventory, Dec 31		($20,100)
Cost of goods sold		$151,400

Requirement b: Multi-step Income statement

Scoggins Sales Co.
Income statement
For the year ended Dec 31,2011
Sales	$320,000
Sales returns and allowances	($8,000)
Net sales		$312,000
Cost of goods sold		($151,400)
Gross profit		$160,600
Operating expenses:
Advertising expense	$10,400
Rent expense	$18,000
Salaries expense	$53,000
Transportation-out	$10,800
Utilities expense	$11,200
Miscellaneous expense	$800
Total operating expenses		$104,200
Operating income		$56,400
Non-operating income (Expenses):
Gain on sale of land	$4,000
Interest expense	($5,000)
Total non-operating income(Expense):		($1,000)
Net income		$55,400

Requirement c: single step income statement

Scoggins Sales Co.
Income statement
For the year ended Dec 31,2011
Revenues:
Sales	$320,000
Sales returns and allowances	($8,000)
Net sales		$312,000
Gain on sale of land		$4,000
Total revenues		$316,000
Expenses:
Cost of goods sold	$151,400
Advertising expense	$10,400
Rent expense	$18,000
Salaries expense	$53,000
Transportation-out	$10,800
Utilities expense	$11,200
Miscellaneous expense	$800
Interest expense	$5,000
Total expenses		$260,600
Net income		$55,400