Multiple-Step Income Statement On March 31, 2019, the balances of the accounts appearing in the ledger of Racine Furnishings Company, a furniture wholesaler, are as follows: Accumulated Depreciation—Building $786,100 Merchandise Inventory $956,500 Administrative Expenses 540,500 Notes Payable 242,500 Building 2,421,550 Office Supplies 19,600 Cash 172,400 Salaries Payable 8,150 Cost of Merchandise Sold 3,949,550 Sales 6,472,900 Interest Expense 10,000 Selling Expenses 694,900 Kathy Melman, Capital 1,617,200 Store Supplies 91,700 Kathy Melman, Drawing 166,650 a. Prepare a multiple-step income statement for the year ended March 31, 2019. Racine Furnishings Company Income Statement For the Year Ended March 31, 2019 $ Gross profit $ Expenses: $ Total expenses $ Other expense: $ b. What is a major advantage of the multiple-step income statement over the single-step income statement?
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Multiple-Step Income Statement
On March 31, 2019, the balances of the accounts appearing in the ledger of Racine Furnishings Company, a furniture wholesaler, are as follows:
| $786,100 | Merchandise Inventory | $956,500 | ||
| Administrative Expenses | 540,500 | Notes Payable | 242,500 | |
| Building | 2,421,550 | Office Supplies | 19,600 | |
| Cash | 172,400 | Salaries Payable | 8,150 | |
| Cost of Merchandise Sold | 3,949,550 | Sales | 6,472,900 | |
| Interest Expense | 10,000 | Selling Expenses | 694,900 | |
| Kathy Melman, Capital | 1,617,200 | Store Supplies | 91,700 | |
| Kathy Melman, Drawing | 166,650 |
a. Prepare a multiple-step income statement for the year ended March 31, 2019.
| Racine Furnishings Company | ||
| Income Statement | ||
| For the Year Ended March 31, 2019 | ||
| $ | ||
| Gross profit | $ | |
| Expenses: | ||
| $ | ||
| Total expenses | ||
| $ | ||
| Other expense: | ||
| $ |
b. What is a major advantage of the multiple-step income statement over the single-step income statement?
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