Question

For each of the following, fill in the blank with either Increase or Decrease 1 2 4 A debit Acredit A debit A credit A debit A credit to Accounts Payable to Prepaid Expenses to Retained Earnings to Utilities Expense to Dividends to Accounts Receivable would decrease the account. would decrease the account. would increase the account. would increase the account. would increase the account. would decrease the account. 6 * computer or Using the normal balances for Gus Company below, prepare a Multi-step Income written Statement, Statement of Retained Earnings, and a Classified Balance Sheet. You do not need to distinguish between Selling and General/Admin Expenses but be sure that appropriate dates are indicated in each of the three statements. Gus Company (accounts are in alphabetical order) Year ended December 31, 2020 - Accounts Payable 32,000 A Accounts Receivable 35,000 LA Accumulated Depreciation 20,000 Allowance for Uncollectible Accounts 3,500 * Bad Debt Expense 4,500 A Cash 50,000 E Common Stock 46,000 Cost of Goods Sold 116,000 Current Portion of Mortgage Payable 8,000 Depreciation Expense 5,000 E Dividends 10,000 A Equipment 45,000 Loss on the Sale of Building 3,000 * A Merchandise Inventory 60,000 . L Mortgage Payable 10,000 A Prepaid Rent 1,200 Rent Expense 11,800 E Retained Earnings 24,500 Sales Returns & Allowances 15,000 Sales Revenue 255,000 Sales Tax Payable 3,100 A Supplies 800 -Supplies Expense 1,800 L Unearned Rent Revenue 2,000 Wage Expense 51,200 Wages Payable 6,200

Answer 1

A.   Multi-Step Income Statement

Sales Revenue	255000
Less: Sales returns and allowances	(15000)	240000
Less: COGS		(116000)
Operating Expenses:
-Bad debt expense	4500
-Depreciation expense	5000
-Rent expense	11800
-Wages expense	51200
-Supplies expense	1800
Total Operating Expenses		(74300)
Operating Income		49700
Non-Operating/Others:
-Loss on sale of building		(3000)
Net Income		46700

B. Statement of Retained Earnings

Retained Earnings at the

beginning of the period 24500

Add: Net Income 46700

Less: Dividends                    (10000)

__________

Retained Earnings at the    

end of the period                   61200

C. Balance Sheet           

Common stock	46000	Equipment                   45000      Less: Accumulated Depreciation                (20000)	25000
RE (as per statement of RE)	61200
Accounts Payable	32000	Accounts Receivable     35000 Less: Allowance for uncollectible Accounts (3500)	31500
Current Portion of Mortgage Payable	8000
Mortgage Payable	10000	Cash	50000
Unearned rent	2000	Inventory	60000
wages payable	6200	Prepaid rent	1200
Sales tax	3100	supplies	800
Total	168500	Total	168500