Warr22e_IM_TM_Ch06 - Transparency Master 6-1 The Income...

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Transparency Master 6-1 The Income Statement— An Expanded View Single-Step Multiple-Step Income Income Statement Statement (Chapters 1–4) (Chapter 6) Revenue from Sales: Sales Revenues Revenue from Sales Allowances Sales Discounts Net Sales – Expenses – Cost of Merchandise Sold Gross Profit Operating Expenses: Selling Expenses – Operating Expenses + Administrative Expenses Total Operating Expenses Income from Operations + Other Income (i.e., Interest, Rent) – Other Expenses (i.e., Interest) Net Income Net Income { {
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Transparency Master 6-2 ADJUSTED TRIAL BALANCE Gem City Music Adjusted Trial Balance December 31, 20— Cash. ............................................... 11,000 Accounts Receivable. .................... 15,800 Merchandise Inventory. ................. 9,600 Office Equipment. .......................... 23,000 Accumulated Depreciation— Office Equipment. ...................... 9,200 Accounts Payable. ......................... 16,000 Salaries Payable. ............................ 1,250 M. Marx, Capital. ............................. 11,500 M. Marx, Drawing. .......................... 12,800 Sales. ............................................... 189,300 Sales Returns and Allowances. .... 1,700 Sales Discounts. ............................ 500 Cost of Merchandise Sold. ............ 100,000 Rent Expense. ................................ 7,800 Sales Salaries Expense. ................ 17,700 Office Salaries Expense. ............... 22,550 Depreciation Expense— Office Equipment. ...................... 2,800 Interest Expense. ........................... 2,000 Total. ............................................... 227,250 227,250 Transparency Master 6-3
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INCOME STATEMENT Gem City Music Income Statement For the Year Ended December 31, 20— Revenue from sales:. .................... Sales . ...................................... $189,300 Less: Sales returns and allowances. .................. $ 1,700 Sales discounts. .......... 500 2,200 Net sales. .................................. $187,100 Cost of merchandise sold. ........... 100,000 Gross profit. ................................... $ 87,100 Operating expenses: Selling expenses: Sales salaries expense. ...... $17,700 Administrative expenses: Rent expense $ 7,800 Office salaries expense. ..... 22,550 Depreciation expense— office equipment. ................ 2,800 33,150 Total operating expenses. ...... 50,850 Income from operations. .............. $ 36,250 Other expense: Interest expense. ..................... 2,000 Net income . ................................... $ 34,250 Transparency Master 6-4
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STATEMENT OF OWNER’S EQUITY Gem City Music Statement of Owner’s Equity For the Year Ended December 31, 20— M. Marx, Capital, January 1, 20--. $11,500 Net income for the year. ............... $34,250 Less withdrawals. .......................... 12,800 Increase in owner’s equity. .......... 21,450 M. Marx, Capital, December 31, 20-- $32,950 Transparency Master 6-5
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BALANCE SHEET Gem City Music Balance Sheet
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Warr22e_IM_TM_Ch06 - Transparency Master 6-1 The Income...

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