Question

What would the worksheet, 3 financial statements, and the post-closing trial balance look like if the multistep income statement was used?

World Boards Co. is a merchandising business. The account balances for the company as of December 1

2010 are as follows:

   cash:$   21,200

   accounts receivable:51,300

   inventory:200,800

   prepaid insurance:5,600

    store supplies:3,800

    store equipment:156,500

    accumulated depreciation – equipment:18,900

    accounts payable:32,200

    salaries payable:----

   common stock:85,100

   retained earnings:100,000

   dividends:45,000

   income summary:-------

   sales:1,073,700

   sales returns and allowances:30,900

   sales discounts:19,800

   cost of goods sold:541,000

   sales salaries expense:111,600

   advertising expense:27,000

   depreciation expense:-----

   store supplies expense:-----

   miscellaneous selling expense:4,200

   office salaries expense:60,700

   rent expense:27,900

  insurance expense:---- -

   miscellaneous administrative expense:2,600

During December, the last month of the year, the following transactions were completed:

1.   Paid rent for the month of December, $2,400.

3.   Purchased inventory on account from Huisman Co., terms 2/10,n/30, FOB shipping point, $21,600.

4.   Paid transportation charges on the Dec. 3rd purchase, 500.

6.   Sold inventory on account to Hillcrest Co. terms 2/10,n/30, FOB shipping point, $8,500. The cost

was $5,000

7.   Received $8,900 cash from Foley Co. on account, no discount.

10. Sold inventory for cash, $27,200. The cost was $16,000.

13. Paid for the inventory purchased on Dec. 3rd less discount.

14. Received inventory returned from the sale of Dec. 6 th, $1,500. The cost was $900.

15. Paid advertising expense for the last half of December, $2,600.

16. Received cash from the sale of December 6th less return and discount.

19. Purchased inventory for cash, $11,800.

19 Paid $9,000 to Bakke Co. on account, no discount..

20. Sold inventory on account to Wilts Co. terms 1/10,n/30, FOB shipping point, $22,300, the cost was

$13,200.

21. For the convenience of the customer, paid shipping charges on sale of Dec. 20th, $1,100.

21. Received $17,600 cash from Owen Co. on account, no discount.

21. Purchased inventory on account from Nye Co., terms 1/10,n/30, FOB destination, $19,900.

24. Returned $2,000 of inventory purchased on Dec. 21st. receiving credit from the seller.

26. Refunded cash on a cash sale, $1,200. The cost of the inventory was $700.

28. Paid sales salaries of $7,600 and office salaries of $4,800.

29. Purchased store supplies for cash, $800.

30. Sold inventory on account to Whitetail Co. terms 2/10,n/30, FOB shipping point, $18,750. The cost

was $11,250

30. Received cash from sale of December 20, less discount, plus shipping charges paid on Dec. 21st

31. Paid for purchase of December 21, less return of December 24 and discount.

ADJUSTMENT DATA

   Inventory on hand on December 31                                                                     $196,139

   Insurance expired during the year                                                                               1,875

   Store supplies on hand on Dec. 31st.                                                                            1,500

   Depreciation for the year                                                                                               9,500

Accrued salaries on Dec. 31.

        Sales salaries                       $1,200

         Office salaries                        800

                                                                    

Answer 1