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ACC 290 Week 3 Preparing a Multiple‐Step Income Statement Individual Assignment

ACC 290 Week 3 Preparing a Multiple‐Step Income Statement Individual Assignment

ACC 290 Week 3 Preparing a MultipleStep Income Statement Individual Assignment

Purpose of Assignment 

The purpose of this assignment is to help you become familiar with the parts of the multiple‐step income statement.

Assignment Steps 

Resources: Financial Accounting: Tools for Business Decision Making 

Prepared a correct detailed multi-step income statement, assuming a 25% tax rate, with a brief explanation of 700 words

Based the statement and explanation on the following scenario:

Scenario: An inexperienced accountant prepared this condensed income statement for Simon Company, a retail firm that has been in business for a number of years.

 

SIMON COMPANY
Income Statement
For the Year Ended December 31, 2017

Revenues
Net sales $850,000
Other revenues 22,000
872,000
Cost of goods sold 555,000
Gross profit 317,000
Operating expenses
Selling expenses 109,000
Administrative expenses 103,000
212,000
Net earnings $105,000

 

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As an experienced, knowledgeable accountant, you review the statement and determine the following facts:

Net sales consist of: sales $911000 less freight-out on merchandise sold $33000 and sales returns and allowances $28000.

Other revenues consist of sales discounts $18000 and rent revenue $4000.

Selling expenses consist of salespersons’ salaries $80,000, depreciation on equipment $10,000, advertising $13,000, and sales commissions $6,000.  The commissions represent commissions paid. At December 21, $3,000 of commissions have been earned by salespersons but have not been paid.  All compensation should be recorded as Salaries and Wages Expense.

Administrative expenses consist of office salaries $47,000, dividends $18,000, utilities $12,000, interest expense $2,000, and rent expense $24,000, which includes prepayments totaling $6,000 for the first quarter of 2018.

Prepare a detailed multi-step income statement with a brief explanation of 700 words. Assume a 25% tax rate. 

Show your work on the Excel® spreadsheet and submit with your explanation.

Click the Assignment Files tab to submit your assignment.

Course: ACC290 Principles of Accounting I
School: University of Phoenix

  • : 12/11/2017
  • : 60

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