Question

INCOME STATEMENT, STATEMENT OF OWNER'S EQUITY, AND
BALANCE SHEET 

Paulson's Pet Store completed the Adjusted Trial
Balance on page 600 for the year ended December 31, 20--. Owner's
equity as of January 1, 20--, was $504,320. The current portion of Note
Payable is $2,000.

REQUIRED
1. Prepare a multiple-step income statement.
2. Prepare a statement of owner's equity.
3. Prepare a balance sheet.

Answer 1

Paulson's Pet Store
Income Statement
For Year Ended December 31, 20--
Revenue from sales:
Sales			326,040
Less: Sales return and allowances			5,360
Net sales				320,680
Cost of goods sold:
Merchandise inventory, Jan. 1, 20--		-
Estimated return inventory, Jan. 1, 20--		-	60,000
Purchases		162,640
Less: Purchase return and allowances	4,080
Less: Purchase discounts	3,200	7,280
Net purchases		155,360
Add: Freight-in		1,600
Cost of goods purchased.			156,960
Goods available for sale			216,960
Less: Merchandise inv., Dec. 31, 20--		64,800
Less: Estimated return inventory, Dec. 31, 20--		1,200	66,000
Cost of goods sold				150,960
Gross profit				169,720
Operating Expense
Wages expense			69,400
Advertising expense			1,200
Supplies expense			800
Phone expense			2,736
Utility expense			2,864
Insurance expense			1,600
Depr. Expense - Building			10,000
Depr. Expense - Equipment			1,800
Miscellaneous Expense			600
Total Operating Expenses				91,000
Income From Operations				78,720
Non-Operating Expenses:
Interest expense				640
Net income

Paulson's Pet Store
Statement of Owner's Equity
For Year Ended December 31, 20--
B. Paulson, Capital, Jan. 1, 20--		504,320
Add: Additional Investments		30,000
Total Investments		534,320
Net Income for the year	78,080
Less: Withdrawals for the year	4,800
Increase in capital		73,280
B. Paulson, Capital, Dec. 31, 20--		607,600

Paulson's Pet Store
Balance Sheet
December 31, 20--
Assets
Current Assets
Cash		23,440
Accounts receivable		9,360
Merchandise inventory		64,800
Estimated return inventory		1,200
Supplies		2,400
Prepaid insurance		1,800
Total current assets			103,000
Property, plant, and equipment
Land		90,000
Building	350,000
Less: Accumulated depreciation	20,000	330,000
Equipment	120,000
Less: Accumulated depreciation	3,600	116,400	536,400
Total Assets			639,400
Liabilities
Current Liabilities
Note payable	2,000
Accounts payable	9,560
Customer refunds payable	1,600
Wages payable	1,200
Sales tax payable	3,440
Total Current Liabilities		17,800
Long-term liabilities
Note payable	16,000
Less: Current portion	2,000	14,000
Total liabilities			31,800
Owner's Equity
B. Paulson, Capital			607,600
Total Liabilities and Equity			639,400

Answer 2

Total will be 154,643.66