Business Finance
ACC290 Phoenix Week 3 Simon Company Income Statement Analysis

ACC290

University of Phoenix

Question Description

Purpose of Assignment

The purpose of this assignment is to help you become familiar with the parts of the multiple‐step income statement.

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

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.

Click the Assignment Files tab to submit your assignment.

Faculty Materials

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    Preparing a Multiple‐Step Income Statement Grading Guide ACC/290 Version 7 Principles of Accounting I Copyright Copyright © 2017, 2015, 2014, 2013, 2012, 2011 by University of Phoenix. All rights reserved. University of Phoenix® is a registered trademark of Apollo Group, Inc. in the United States and/or other countries. Microsoft®, Windows®, and Windows NT® are registered trademarks of Microsoft Corporation in the United States and/or other countries. All other company and product names are trademarks or registered trademarks of their respective companies. Use of these marks is not intended to imply endorsement, sponsorship, or affiliation. Edited in accordance with University of Phoenix® editorial standards and practices. Preparing a correct Multiple‐Step Income Statement Grading Guide ACC/290 Version 7 Individual Assignment: Preparing a correct Multiple‐Step Income Statement Purpose of Assignment The purpose of this assignment is to help you become familiar with the parts of the multiple‐step income statement. Resources Required Financial Accounting: Tools for Business Decision Making. Grading Guide Content Prepared a correct detailed multi-step income statement, assuming a 25% tax rate, with a brief explanation of 700 words. Based the statement and explanation on the following 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. Determined the following: Net sales consist of sales $911,000, less freight-out on merchandise sold $33,000, and sales returns and allowances $28,000. Determined the following: Other revenues consist of sales discounts $18,000 and rent revenue $4,000. Met Partially Met Not Met Comments: 2 Preparing a correct Multiple‐Step Income Statement Grading Guide ACC/290 Version 7 Content Met Partially Met Not Met Total Available Total Earned 5 #/5 Partially Met Not Met Total Available Total Earned 3 #/3 8 #/8 Comments: 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. Determined the following: 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. Showed work. Writing Guidelines Met The paper—including tables and graphs, headings, title page, and reference page—is consistent with APA formatting guidelines and meets course-level requirements. Intellectual property is recognized with in-text citations and a reference page. Paragraph and sentence transitions are present, logical, and maintain the flow throughout the paper. Sentences are complete, clear, and concise. Rules of grammar and usage are followed including spelling and punctuation. Assignment Total # Comments: 3 Preparing a correct Multiple‐Step Income Statement Grading Guide ACC/290 Version 7 Assignment Total Additional comments: # 8 #/8 4 Name Section Date Problem 5-5A Simon Company SIMON COMPANY Income Statement For the Year Ended December 31, 2017 289 ...
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    Final Answer

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    Preparing a correct Multiple‐Step Income Statement
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    Preparing a correct Multiple‐Step Income Statement
    A company’s accountant should be competent and present accurate financial statements
    for a given period to enhance the decision-making process. In this case, as an experienced
    accountant am supposed to prepare an exclusive multi-step income statement for Simon
    Company correcting what a less experienced had made. A multi-step income statement differs
    from a single-step income statement. A multi-step income statement has information on expenses
    and revenues, unlike a single-step income statement that comprises of three sections revenues,
    expenses, and income. (IASB, 2016)
    In a multi-step income statement, revenue is indicated in details showing sales revenue
    less freight costs and returns and allowances to get the net sales revenue. There is a step that
    demonstrates the accumulation of the deductions.

    After getting the net sales revenue, an

    accountant deducts the cost of goods sold to get gross profit. The calculations are carried out
    systematically and in various steps to arrive at...

    chriss200 (7683)
    Cornell University

    Anonymous
    Return customer, been using sp for a good two years now.

    Anonymous
    Thanks as always for the good work!

    Anonymous
    Excellent job

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