Question

Presented below is the adjusted trial balance of Katie’s Pet Supplies as at its fiscal year end, June 30, 2017. All accounts are their normal balance (debit or credit). Katie’s uses the perpetual inventory system.

Accounts payable........................... $ 34,850 K. Milani, Capital..................... $ 50,770

Accounts receivable.......................... 27,300 K. Milani, Drawings.................. 24,000

Accum. depreciation, computers......... 1,500 Long-term note receivable...... 14,000

Accum. depreciation, equipment....... 32,000 Merchandise inventory............ 55,000

Advertising expense............................ 3,200 Note payable, due 2018.......... 47,000

Cash.................................................... 9,500 Prepaid rent............................. 1,500

Computers........................................... 4,500 Rent expense.......................... 14,000

Cost of goods sold........................... 195,000 Salaries expense..................... 46,800

Depreciation Expense......................... 4,000 Salaries payable...................... 6,200

Equipment.......................................... 80,000 Sales discounts....................... 100

Freight-out expense............................. 6,200 Sales returns and allowances. 1,000

Insurance expense.............................. 2,200 Sales revenue.......................... 320,000

Interest expense.................................. 2,350 Supplies................................... 900

Interest payable...................................... 280 Supplies expense.................... 1,750

Interest revenue...................................... 700

Instructions Prepare a multiple-step income statement.

Answer 1

Multi-step Income Statement
Revenues
Sales revenue		320,000
Less:
Sales discount	100
Sales return and allowance	1,000
		-1,100
Net Sales		318,900
Cost of goods sold		-195,000
Gross profit		123,900
Operating Expenses:
Advertising expense	3,200
Depreciation expense	4,000
Freight out	6,200
Insurance expense	2,200
Rent expense	14,000
Salaries expense	46,800
Supplies expense	1,750
Total operating expenses		-78,150
Operating Profit		45,750
Other revenues:
Interest revenue		700
Other expenses:
Interest expense		-2,350
Net income		$44,100

Kindly comment if you need further assistance.

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