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Chapter 5: Q5-5TI (page 271)

Question: Capital City Motorcycle鈥檚 selected accounts as of December 31, 2018, follow:

Selling Expenses $ 10,500

Interest Revenue 1,000

Net Sales Revenue 113,500

Cost of Goods Sold 85,000

Administrative Expenses 8,000

Prepare the multi-step income statement for the year ended December 31, 2018.

Short Answer

Expert verified

The net income of the company is $11,000.

Step by step solution

01

Meaning of Multi-step Income Statement

A multi-step income statement refers to a report that bifurcates the business's operational and non-operational activities. The operating section reports the core events of the company, and the non-operating section captures the secondary events.

02

Preparation of multi-step income statement

In the books of Capital City Motorcycle

Multi-step Income Statement

For the year ended December 31, 2018

Particulars

Amounts ($)

Net sales revenue

113,500

Less: Cost of goods sold

(85,000)

Gross profit

28,500

Operating expenses

Less: Selling expenses

(10,500)

Less: Administrative expenses

(8,000)

Income from operations

10,000

Other revenues and gains

Add: Interest revenue

1,000

Net income

11,000

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Most popular questions from this chapter

Camilia Communications reported the following figures from its adjusted trial balance for its first year of business, which ended on July 31, 2018:

Cash \( 2,900 Cost of Goods Sold \) 18,700

Selling Expenses 1,400 Equipment, net 9,500

Accounts Payable 4,300 Accrued Liabilities 1,800

Common Stock 4,365 Net Sales Revenue 29,200

Notes Payable, long-term 500 Accounts Receivable 3,200

Merchandise Inventory 1,100 Interest Expense 65

Administrative Expenses 3,300

Requirements

1. Prepare Camilia Communication鈥檚 statement of retained earnings for the year ended July 31, 2018. Assume that there were no dividends declared during the year and that the business began on August 1, 2017.

2. Prepare Camilia Communication鈥檚 classified balance sheet at July 31, 2018. Use the report format.

Under the new revenue recognition standard, what most companies do at the end of the period related to sales returns? Describe the journal entries that would be recorded.

Macarthy Landscape Supply鈥檚 selected accounts as of December 31, 2018, follow. Compute the gross profit percentage for 2018.

Selling Expenses $ 12,900

Interest Revenue 900

Net Sales Revenue 134,700

Cost of Goods Sold 114,000

Administrative Expenses 10,200

What account is debited when recording a purchase of inventory when using the perpetual inventory system?

On December 31, Jack Photography Supplies estimated that approximately 2% of merchandise sold will be returned. Sales Revenue for the year was \(80,000 with a cost of \)48,000. Journalize the adjusting entries needed to account for the estimated returns.
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