ECON 25 Study Guide - Final Guide: Free Cash Flow, Debits And Credits, Current Liability
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CP6-4 Preparing a Multistep Income Statement with Sales Discounts and Sales Returns and Allowances and Computing the Gross Profit Percentage [LO 6-5]
[The following information applies to the questions displayed below.] |
Psymon Company, Inc. sells construction equipment. The annual fiscal period ends on December 31. The following adjusted trial balance was created from the general ledger accounts on December 31: |
Account Titles |
Debits |
Credits |
||||
Cash |
$ |
59,810 |
Ā | Ā | Ā | Ā |
Accounts Receivable |
Ā |
24,800 |
Ā | Ā | Ā | Ā |
Inventory |
Ā |
90,500 |
Ā | Ā | Ā | Ā |
Property and Equipment |
Ā |
67,000 |
Ā | Ā | Ā | Ā |
Accumulated Depreciation |
Ā | Ā | Ā |
$ |
28,100 |
Ā |
Liabilities |
Ā | Ā | Ā | Ā |
41,900 |
Ā |
Common Stock |
Ā | Ā | Ā | Ā |
124,000 |
Ā |
Retained Earnings, January 1 |
Ā | Ā | Ā | Ā |
15,000 |
Ā |
Sales Revenue |
Ā | Ā | Ā | Ā |
258,500 |
Ā |
Sales Returns and Allowances |
Ā |
8,700 |
Ā | Ā | Ā | Ā |
Sales Discounts |
Ā |
11,400 |
Ā | Ā | Ā | Ā |
Cost of Goods Sold |
Ā |
138,800 |
Ā | Ā | Ā | Ā |
Salaries and Wages Expense |
Ā |
23,800 |
Ā | Ā | Ā | Ā |
Office Expense |
Ā |
24,800 |
Ā | Ā | Ā | Ā |
Interest Expenses |
Ā |
3,700 |
Ā | Ā | Ā | Ā |
Income Tax Expense |
Ā |
14,190 |
Ā | Ā | Ā | Ā |
Ā | Ā | Ā | Ā | Ā | Ā | Ā |
Totals |
$ |
467,500 |
Ā |
$ |
467,500 |
Ā |
Ā | Ā | Ā | Ā | Ā | Ā | Ā |
Ā |
Required: |
1. |
Prepare a multistep income statement that would be used for internal reporting purposes. Treat Sales Discounts and Sales Returns and Allowances as contra-revenue accounts. TIP: Some of the accounts listed will appear on the balance sheet rather than the income statement. |
2. |
Prepare a multistep income statement that would be used for external reporting purposes, beginning with the amount for Net Sales. |