E5-10 Prepare multiple-step and single-step income statement

In its income statement for the year ended December 31, 2017, Anhad Company reported the following
condensed data.

Operating Expenses $725,000 Interest revenue

Cost of goods sold 1,289,000 Loss on disposal of plant assets
Interest expense 70,000 Net sales

Instructions:
(a) Prepare a multiple-step income statement.
(b) Prepare a single-step income statement.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a

(a) Multiple-step income statement

ANHAD COMPANY
Income Statement
For the Year ended December 31, 2017
Net sales Value
Cost of goods sold Value
Gross profit ?
Operating expenses Value
Income from operations ?
Other revenues and gains
Interest revenue Value
Other expenses and losses
Interest expense Value
Loss on disposal of plant assets Value ? ?
Net income ?

(b) Single-step income statement

ANHAD COMPANY
Income Statement
For the Year ended December 31, 2017
Revenues
Net Sales Value
Interest revenue Value
Total revenues ?

Expenses
Cost of goods sold Value
 Operating expenses Value
Interest expense Value
Loss on disposal of plant assets Value
Total expenses ?
Net income ?

After you have completed the requirements of E5-10, consider the additional question.
Answers are on the other tab in this file.
1. Assume cost of goods sold changed to $1,320,000. What impact does this have on net income,
as determined using both the multiple-step and single-step income statements?
any reported the following

$28,000
17,000
2,200,000

or a formula in cells with a "?" .

this have on net income,
P5-1A Journalize purchase and sales transactions under a perpetual inventory system
Kern's Book Warehouse distributes hardcover books to retail stores and extend credit terms of 2/10, n/30 t
At the end of May, Kern's inventory consisted of books purchased for $1,800. During June, the following m
occurred.

June 1Purchased books on account for $1,600 from Binsfield Publishers, FOB destination, terms 2/10, n/3
The appropriate party also made a cash payment of $50 for the freight on this date.
3 Sold books on account to Reading Rainbow for $2,500. The cost of the books sold was $1,440.
6 Received $100 credit for books returned to Binsfield Publishers.
9 Paid Binsfield Publishers in full, less discount.
15 Received payment in full from Reading Rainbow.
17 Sold books on account to Rapp Books for $1,800. The cost of the books sold was $1,080.
20 Purchased books on account for $1,800 from McGinn Publishers, FOB destination, terms 2/15,n/30
The appropriate party also made a cash payment of $60 for the freight on this date.
24 Received payment in full from Rapp Books.
26 Paid McGinn Publishers in full, less discount.
28 Sold books on account to Baeton Bookstore for $1,600. The cost of the books sold was $970.
30 Granted Baeton Bookstore $120 credit for books returned costing $72.

Kern's Book Warehouse's chart of accounts includes the following: No.101 Cash, No.112, Accounts Recei
No.120 Inventory, No. 201 Accounts Payable, No. 401 Sales Revenue, No.412 Sales Returns and Allowan
Sales Discounts, and No. 505 Cost of Goods Sold.

Instructions
Journalize the transactions for the month of June for Kern's Book Warehouse using a perpetual inventory s
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

June 1 Account Value

Account Value

3 Account Value
Account Value
`

3 Account Value
Account Value

6 Account Value
Account Value
 9 Account Value
Account Value
Account Value

15 Account Value
Account Value

17 Account Value
Account Value

17 Account Value
Account Value

20 Account Value
Account Value

24 Account Value
Account Value
Account Value

26 Account Value
Account Value `
Account Value

28 Account Value
Account Value

28 Account Value
Account Value

30 Account Value
Account Value

' 30 Account Value

Account Value
After you have completed the requirements of P5-1A, consider these additional questions.
Answers are on the other tab in this file.
1. Assume that the June 1 purchase changed to $2,500. Redo the journal entries
affected by this change.
2. Assume that the sale on June 28 changed to $3,000 and the cost of sale changed to
$1,200. Redo the journal entries affected by these changes.
edit terms of 2/10, n/30 to all of its customers.
ng June, the following merchandising transactions

stination, terms 2/10, n/30.

ks sold was $1,440.

d was $1,080.
ination, terms 2/15,n/30.

oks sold was $970.

No.112, Accounts Receivable,

les Returns and Allowances, No. 414

g a perpetual inventory system.

ula in cells with a "?" .
P5-5A Complete accounting cycle beginning with a worksheet
The trial balance of Gaolee Fashion Center contained the following accounts at November 30, the end of t

GAOLEE FASHION CENTER

Trial Balance
November 30, 2017
Debit Credit
Cash $ 20,700
Accounts Receivable 30,700
Inventory 44,700
Supplies 6,200
Equipment 133,000
Accumulated Depreciation - Equipment $ 28,000
Accounts Payable 48,500
Notes Payable 60,000
Owner's Capital 93,000
Owner's Drawings 12,000
Sales Revenue 755,200
Sales Returns and Allowances 8,800
Cost of Goods Sold 497,400
Salaries and Wages Expense 140,000
Advertising Expense 24,400
Utilities Expense 14,000
Maintenance and Repairs Expense 12,100
Freight-Out 16,700
Rent Expense 24,000
Totals $984,700 $984,700

Adjustment Data:
1. Supplies on hand totaled $2,600.
2. Depreciation is $11,500 on the equipment.
3. Interest of $3,800 is accrued on notes payable at November 30.
4. Inventory actually on hand is $44,400.

Instructions
(a) Enter the trial balance on a worksheet, and complete the worksheet.
(b) Prepare a multiple-step income statement and an owner's equity statement for the year, and
a classified balance sheet as of November 30, 2017. Notes payable of $20,000 are due in Janu
(c ) Journalize the adjusting entries.
(d) Journalize the closing entries.
(e ) Prepare a post-closing trial balance.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells
(a) Enter the trial balance on a worksheet, and complete the worksheet.

GAOLEE FASHION CENTER

Worksheet
For the Year Ended November 30, 2017

Account Titles Trial Balance Adjustments

Dr. Cr. Dr.

Cash 20,700
Accounts Receivable 30,700
Inventory 44,700
Supplies 6,200
Equipment 133,000
Accumulated Depreciation - Equipment 28,000
Accounts Payable 48,500
Notes Payable 60,000
Owner's Capital 93,000
Owner's Drawings 12,000
Sales Revenue 755,200
Sales Returns and Allowances 8,800
Cost of Goods Sold 497,400 (d) Value
Salaries and Wages Expense 140,000
Advertising Expense 24,400
Utilities Expense 14,000
Maintenance and Repairs Expense 12,100
Freight-Out 16,700
Rent Expense 24,000
Totals 984,700 984,700

Supplies Expense (a) Value

Depreciation Expense (b) Value
Interest Expense ( c) Value
Interest Payable
Totals ?
Net Loss
Totals

(b) Prepare a multiple-step income statement and an owner's equity statement for the year, and a classi
balance sheet as of November 30, 2017. Notes payable of $20,000 are due in January 2018.

GAOLEE FASHION CENTER

Income Statement
For the Year Ended November 30, 2017
Sales Revenue
Sales revenue Value
Less: Sales returns and allowances Value
Net sales ?
Cost of goods sold Value
Gross profit ?
Operating expenses
Salaries and wages expense Value
Advertising expense Value
Rent expense Value
Freight-out Value
Utilities expense Value
Maintenance and repair expense Value
Depreciation expense Value
Supplies expense Value
Total operating expenses ?
Income from operations ?
Other expenses and losses
Interest expense Value
Net loss ?

GAOLEE FASHION CENTER

Owner's Equity Statement
For the Year Ended November 30, 2017
Owner's Capital, December 1, 2016 Value
Less: Net loss Value
Drawings Value ?
Owner's Capital, November 30, 2017 ?

GAOLEE FASHION CENTER

Balance Sheet
November 30, 2017
Assets
Current assets
Cash Value
Accounts Receivable Value
Inventory Value
Supplies Value
Total current assets ?
Property, plant and equipment
Equipment Value
Accumulated depreciation - Value ?
 equipment
Total assets ?

Liabilities and Owner's Equity

Current liabilities
Account payable Value
Notes payable (due next year) Value
Interest payable Value
Total current liabilities ?
Long-term liabilities
Notes payable Value
Total liabilities ?
Owner's equity
Owner's capital Value
Total liabilities and owner's equity ?

(c ) Journalize the adjusting entries.

Nov. 30 Account Value

Account Value

Nov. 30 Account Value

Account Value

Nov. 30 Account Value

Account Value

Nov. 30 Account Value

Account Value

(d) Journalize the closing entries.

Nov. 30 Account Value

Account Value

Nov. 30 Account Value

Account Value
Account Value
Account Value
Account Value
Account Value
Account Value
Account Value
 Account Value
Account Value
Account Value
Account Value

Nov. 30 Account Value

Account Value

Nov. 30 Account Value

Account Value

(e ) Prepare a post-closing trial balance.

GAOLEE FASHION CENTER

Post-closing Trial Balance
November 30, 2017
Debit Credit
Cash Value
Accounts Receivable Value
Inventory Value
Supplies Value
Equipment Value
Less: Accumulated Depreciation - Equipment Value
Accounts payable Value
Notes payable Value
Interest payable Value
Owner's Capital Value
? ?

After you have completed the requirements of P5-5A, consider the additional question.
Answers are on the other tab in this file.
1. Assume that supplies on hand and Interest accrued changed to $3,000 and $4,600
respectively. How do these changes affect the financial statements?
vember 30, the end of the company's fiscal year.

nt for the year, and

$20,000 are due in January 2018.

r or a formula in cells with a "?" .

ASHION CENTER
orksheet
ed November 30, 2017
Adjusted Income
Adjustments Trial Balance Statement Balance Sheet
Cr. Dr. Cr. Dr. Cr. Dr. Cr.

Value Value
Value Value
(d) ? ? Value
(a) ? ? Value
Value Value
(b) Value ? Value
Value Value
Value Value
Value Value
Value Value
Value Value
Value Value
Value Value
Value Value
Value Value
Value Value
Value Value
Value Value
Value Value

Value
Value
Value
( c) Value Value Value
? ? ? ? ? ? ?
? Value
? ? ? ?

or the year, and a classified

n January 2018.