Week 6 Assignment-Estimating Inventory and Preparing Multiple-Step and Single-Step Income Statements

Week 6 Assignment-Estimating Inventory and Preparing Multiple-Step and Single-Step Income Statements

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Problem 5-4A Computing merchandising amounts and formatting income statements C4 P4 Check (2) \$88,600; (3) Gross profit, \$112,150; Net income, \$22,750; (4) Total expenses, \$172,000 BizKid Company’s adjusted trial balance on August 31, 2005, its fiscal year-end, follows: Debit Credit Merchandise inventory \$ 31,000 Other (noninventory) assets 120,400 Total liabilities \$ 35,000 N. Kidman, Capital 101,650 N. Kidman, Withdrawals 8,000 Sales 212,000 Sales discounts 3,250 Sales returns and allowances 14,000 Cost of goods sold 82,600 Sales salaries expense 29,000 Rent expense—Selling space 10,000 Store supplies expense 2,500 Advertising expense 18,000 Office salaries expense 26,500 Rent expense—Office space 2,600 Office supplies expense 800 Totals \$348,650 \$348,650 On August 31, 2004, merchandise inventory was \$25,000. Supplementary records of merchandising activities for the year ended August 31, 2005, reveal the following itemized costs: Invoice cost of merchandise purchases . . . . . . . \$91,000 Purchase discounts received . . . . . . . . . . . . . 1,900 Purchase returns and allowances . . . . . . . . . . . 4,400 Costs of transportation-in . . . . . . . . . . . . . . 3,900 Required 1. Compute the company’s net sales for the year. Sales \$212,000

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Less: Sales Discounts 3,250 14,000 Net Sales \$194,750 2. Compute the company’s total cost of merchandise purchased for the year. Invoice cost of Merchandise Purchases \$91,000 Less: Purchase Discounts Received 1,900 4,400 Add: Costs of Transportation-in 3,900 Total Cost of Merchandise Purchases \$88,600 3. Prepare a multiple-step income statement that includes separate categories for selling expenses and for general and administrative expenses. BizKid Income Statement For Year Ended August 31, 2005 Sales \$212,000 Less: Sales Discounts \$ 3,250 14,000 17,250 Net Sales 194,750 Cost of Goods Sold 82,600 Gross Profit 112,150 Operating Expenses Selling expenses Sales Salaries expense 29,000 Rent expense—Selling space 10,000 Store Supplies expense 2,500 Advertising expense 18,000 Total selling expenses 59,500 General and Administrative expenses Office Salaries expense 26,500 Rent expense-Office space 2,600 Office Supplies expense 800 Total general and administrative expenses 29,900 Total Operating expenses
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This note was uploaded on 09/06/2010 for the course ACC 225 acc 225 taught by Professor Unknown during the Spring '10 term at University of Phoenix.

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Week 6 Assignment-Estimating Inventory and Preparing Multiple-Step and Single-Step Income Statements

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