Preparing a Multiple-Step Income Statement

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Purpose of Assignment Materia’s
Preparing a Multiple-Step Income Statement
The purpose of this assugnment IS to help you become familiar Grading Guide
with the parts of the multiple-step income statement. Week 3 Excel® Spreadsheet
Assignment Steps
Resources: Financial Accounting: Tools for Business Decision
Making
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 Law
872,000
Cost of goods sold fi,w
Gross profit 317,000
Operating expenses
Selling expenses 109,000
Administrative expenses @.M
m.m
Net earnings $105,000
As an experienced, knowledgeable accountant, you review the
statement and determine the following facts:
1. Net sales consist of: sales $911,000, less freight-out on
merchandise sold $33,000, and sales returns and
allowances $28,000.
2. Other revenues consist of sales discounts $18,000 and
rent revenue $4,000.
3. 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.
4. 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°/o tax rate.
Show your work on the Excel® spreadsheet and submit with
your explanation.
Click the Assignment Files tab to submit your assignment.

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Last Updated on April 25, 2020 by