Question

Multiple-Step Income Statement and Report Form of Balance Sheet

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

Cash	$114,700		Retained Earnings	505,500
Accounts Receivable	305,800		Dividends	68,700
Inventory	348,600		Sales	$4,200,600
Estimated Returns Inventory	22,500		Cost of Goods Sold	2,429,700
Office Supplies	10,800		Sales Salaries Expense	683,300
Prepaid Insurance	8,400		Advertising Expense	187,900
Office Equipment	252,400		Depreciation Expense—    Store Equipment	36,600
Accumulated Depreciation—    Office Equipment	171,500		Miscellaneous Selling Expense	16,000
Store Equipment	787,800		Office Salaries Expense	373,000
Accumulated Depreciation—    Store Equipment	252,400		Rent Expense	55,100
Accounts Payable	174,600		Depreciation Expense—    Office Equipment	27,500
Customer Refunds Payable	40,000		Insurance Expense	17,100
Salaries Payable	11,200		Office Supplies Expense	10,100
Note Payable    (final payment due 2024)	367,500		Miscellaneous Administrative Exp.	7,300
Common Stock	51,200		Interest Expense	11,200

Required:

1. Prepare a multiple-step income statement.

2. Prepare a retained earnings statement.

3. Prepare a balance sheet, assuming that the current portion of the note payable is $18,375.

4. Which type of income statement shows intermediate balances?

1. Prepare a multiple-step income statement. Clairemont Co. Income Statement For the Year Ended May 31, 2018 $ Expenses: Selling expenses: $ Total selling expenses $ Administrative expenses: $

Answer 1

	Multistep income statement
	Sales					$ 4,200,600.00
Less:	Cost of Good sold					$ 2,429,700.00
	Gross Margin					$ 1,770,900.00
	Expenses:
	Selling expenses:
	Sales salaries expense			$ 683,300.00
	Advertising expense			$ 187,900.00
	Dep. Expense - Store Equipment			$   36,600.00
	Misc. selling expense			$   16,000.00
	Total selling expense				$ 923,800.00
	Administrative expenses:
	Office salaries expense			$ 373,000.00
	Rent Expense			$   55,100.00
	Dep. Expense - Office Equipment			$   27,500.00
	Insurance Expense			$   17,100.00
	Office supplies expense			$   10,100.00
	Misc. adm. Expense			$     7,300.00
	Total adm. expense				$ 490,100.00
	Total Operating expenses					$ 1,413,900.00
	Income from operations					$     357,000.00
	Non-operating expense:
	Interest Expense					$       11,200.00
	Net Income					$     345,800.00

	Retained Earnings Statement
	Beginning Balance			$ 505,500.00
Add:	Net Income		$ 345,800.00
Less:	Dividends		$   68,700.00
	Increase in Equity			$ 277,100.00
	Ending Balance			$ 782,600.00

Balance Sheet
Assets
Current Assets:
Cash					$ 114,700.00
Accounts Receivable					$ 305,800.00
Inventory					$ 348,600.00
Estimated Returns Inventory					$   22,500.00
Office Supplies					$   10,800.00
Prepaid Insurance					$     8,400.00
Total current assets						$     810,800.00
Property, Plant and Equipment:
Office Equipment				$ 252,400.00
Less: Accumulated Dep				$ 171,500.00	$   80,900.00
Store Equipment				$ 787,800.00
Less: Accumulated Dep				$ 252,400.00	$ 535,400.00
Total Property, Plant and Equipment						$     616,300.00
Total Assets						$ 1,427,100.00
Liabilities
Current Liabilities:
Accounts Payable					$ 174,600.00
Customers Refund Payable					$   40,000.00
Salaries Payable					$   11,200.00
Notes Payable					$   18,375.00
Total Current Liabilities						$     244,175.00
Long term Liabilities:
Notes Payable		($ 367500 - $ 18375)				$     349,125.00
Total Liabilities						$     593,300.00
Stockholder's Equity
Common Stock					$   51,200.00
Retained Earnings					$ 782,600.00
Total Stockholder's Equity						$     833,800.00
Total Liabilities and Stockholder's Equity						$ 1,427,100.00