Simon Company Multi-step Income Statement, accounting homework help

User Generated

ybbcf79

Business Finance

Description

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

22,000

872,000

Cost of goods sold

555,000

Gross profit

317,000

Operating expenses

Selling expenses

109,000

Administrative expenses

103,000

212,000

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% tax rate.

Show your work on the Excel® spreadsheet and submit with your explanation.

Unformatted Attachment Preview

Name Section Date Problem 5-5A Simon Company SIMON COMPANY Income Statement For the Year Ended December 31, 2017 289
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

kindly find the attached worksheet and paper and let me know if you require any other help or corrections made on the same

Name
Section
Date

Problem 5-5A
Simon Company

SIMON COMPANY
Income Statement
For the Year Ended December 31, 2017
Revenues
Sales
less:
sales returns and allowances
Net sales
cost of goods sold

28,000

Gross Profit

911,000
(28,000)
883,000
(555,000)
328,000

Operating expenses
salepersons' salaries
Commissions
depreciation on equiptment

80,000
3,000
10,000

advertising expense
freight out
Administrative expenses
office salaries
utilities

13,000
33,000

rent expense
interest expense
Dividends payouts

18,000
2,000
18,000

139,000

47,000
12,000

97,000

Operating income

(236,000)
92,000

Others
Other incomes
sales discounts
rent revenue
Income before tax

18,000
4,000

Income tax expense
Net income

22,000

22,000
112,000
(28,000)
84,000

289


Name
Section
Date

Problem 5-5A
Simon Company

SIMON COMPANY
Income Statement
For the Year Ended December 31, 2017
Revenues
Sales
less:
sales returns and allowances
Net sales
cost of goods sold

28.000

Gross Profit

911.000
(28.000)
883.000
(555.000)
328.000

Operating expenses
salepersons' salaries
Commissions
depreciation on equiptment

80.000
3.000
10.000

advertising expense
freight out
Administrative expenses
office salaries
utilities

13.000
33.000

rent expense
interest expense
Dividends payouts

18.000
2.000
18.000

139.000

47.000
12.000...


Anonymous
Really helpful material, saved me a great deal of time.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags