Question

Meilleur uses a perpetual inventory system.

The following is a list of the accounts and balances taken from the adjusted trial balance at December 31, 2017 for Meilleur Merchants. The list of accounts is in alphabetical order. All accounts have normal balances.

Account Balance
Dec. 31
1 Accounts payable 15,000
2 Accounts receivable 30,000
3 Accumulated depreciation—building
15,500
4 Accumulated depreciation—equipment
10,000
5 Advertising expense
4,500
6 Building
84,600
7 S. Meilleur, capital
75,000
8 S. Meilleur, drawings
28,300
9 Cash 4,500
10 Cost of goods sold
234,600
11 Depreciation expense
6,200
12 Equipment
24,500
13 Freight out
640
14 Insurance expense
1,250
15 Interest expense
2,020
16 Interest revenue
1,440
17 Land
12,000
18 Merchandise inventory
105,000
19 Mortgage payable
57,600
20 Prepaid insurance
2,100
21 Property tax expense
1,500
22 Property taxes payable
600
23 Rent revenue
1,500
24 Salaries expense
41,000
25 Salaries payable
650
26 Sales
422,400
27 Sales discounts
15,200
28 Sales returns and allowances
18,000
29 Unearned revenue
23,000
30 Utilities expense
1,900

Prepare a multiple-step income statement for Meilleur Merchant for the year ended December 31, 2017.

Answer 1

Prepare a multiple-step income statement for Meilleur Merchant for the year ended December 31, 2017.

Sales		422400
Less: Sales returns and allowances	18000
Less; Sales discount	15200	33200
Net Sales		389200
Less : Cost of goods sold		234600
Gross profit		154600
Less: Operating expense
Depreciation expense	6200
Advertising expense	4500
Freight out	640
Insurance expense	1250
Property tax expense	1500
Salaries expense	41000
Utilities expense	1900
Total operating expense		56990
Operating income		97610
Other revenue and gains
Interest revenue	1440
rent revenue	1500
Other expense and losses
Interest expense	-2020	920
Income before tax		98530