Multi Step Income Statement And Adjusting Entries

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Multi step income statement and adjusting entries – the Boston trading company, whose accounting year ends on December 31, had the following normal balances in its general ledger at December 31:

 

Cash                                                                                      $13,000

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Accounts Receivable                                                       $56,600

Inventory                                                                            $73,000

prepaid insurance                                                            $6000

office supplies                                                                   $4200

furniture and fixtures                                                     $21,000

accumulated depreciation –

furniture and fixtures                                     $5000

delivery equipment                                                        $84,000

accumulated depreciation –

delivery equipment                                        $12,000

Accounts Payable                                                             $41,000

long-term notes payable                                               $30,000

common stock                                                                   $75,000

retained earnings                                                             $51,400

sales revenue                                                                    $630,000

cost of goods sold                                                            $404,000

utilities expense                                                               $4800

sales salaries expense                                                    $82,000

delivery expense                                                              $10,800

advertising expense                                                       $5500

rent expense                                                                     $14,400

office salaries expense                                                  $56,000

income tax expense                                                       $9000

 

During the year, the accounting department prepared monthly statements but no adjusting entries were made in the journals and ledgers. Data for the year and procedures are as follows:

1.       prepaid insurance, December 31, was $1200

2.       depreciation expense on furniture and fixtures for the year was $1800

3.       depreciation expense on delivery equipment for the year was $13,000

4.       salaries payable, December 31 ($1800 sales and $1200 office) was $3000

5.       unused office supplies on December 31 were $1000

 

Required

a.       record the necessary adjusting entries at December 31

b.       prepare a multi step income statement for the year. Combine all operating expenses into one line on the income statement for selling, general and administrative expenses.

 

 

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    multi_step_income_statement_and_adjusting_entries.docx

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