Multiple-Step Income Statement and Report Form of Balance Sheet The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 2019: Cash $122,700 Gerri Faber, Drawing $73,500 Accounts Receivable 330,200 Sales 4,437,700 Merchandise Inventory 373,100 Cost of Merchandise Sold 2,600,500 Estimated Returns Inventory 14,750 Sales Salaries Expense 731,300 Office Supplies 11,600 Advertising Expense 201,100 Prepaid Insurance 9,000 Depreciation Expense—Store Equipment 39,200 Office Equipment 270,100 Miscellaneous Selling Expense 17,200 Accumulated Depreciation—Office Equipment 183,600 Office Salaries Expense 399,200 Store Equipment 843,200 Rent Expense 58,900 Accumulated Depreciation—Store Equipment 270,100 Insurance Expense 18,300 Accounts Payable 186,900 Depreciation Expense—Office Equipment 29,500 Customer Refunds Payable 29,500 Office Supplies Expense 10,800 Salaries Payable 11,900 Miscellaneous Administrative Exp. 7,800 Note Payable (final payment due 2032) 392,500 Interest Expense 11,900 Gerri Faber, Capital 661,650 Required: 1. Prepare a multiple-step income statement. Kanpur Co.Income StatementFor the Year Ended June 30, 2019 Expenses: Selling expenses: Total selling expenses Administrative expenses: Total administrative expenses Total operating expenses 2. Prepare a statement of owner's equity. Kanpur Co.Statement of Owner's EquityFor the Year Ended June 30, 2019 3. Prepare a balance sheet, assuming that the current portion of the note payable is $15,700. Kanpur Co.Balance SheetJune 30, 2019 Assets Current assets: Total current assets Property, plant, and equipment: Total property, plant, and equipment Total assets Liabilities Current liabilities: Total current liabilities Long-term liabilities: Total liabilities Owner's equity Total liabilities and owner's equity 4. Which type of income statement shows intermediate balances?
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Multiple-Step Income Statement and Report Form of Balance Sheet
The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 2019:
| Cash | $122,700 | Gerri Faber, Drawing | $73,500 | |
| 330,200 | Sales | 4,437,700 | ||
| Merchandise Inventory | 373,100 | Cost of Merchandise Sold | 2,600,500 | |
| Estimated Returns Inventory | 14,750 | Sales Salaries Expense | 731,300 | |
| Office Supplies | 11,600 | Advertising Expense | 201,100 | |
| Prepaid Insurance | 9,000 | 39,200 | ||
| Office Equipment | 270,100 | Miscellaneous Selling Expense | 17,200 | |
| 183,600 | Office Salaries Expense | 399,200 | ||
| Store Equipment | 843,200 | Rent Expense | 58,900 | |
| Accumulated Depreciation—Store Equipment | 270,100 | Insurance Expense | 18,300 | |
| Accounts Payable | 186,900 | Depreciation Expense—Office Equipment | 29,500 | |
| Customer Refunds Payable | 29,500 | Office Supplies Expense | 10,800 | |
| Salaries Payable | 11,900 | Miscellaneous Administrative Exp. | 7,800 | |
| Note Payable (final payment due 2032) | 392,500 | Interest Expense | 11,900 | |
| Gerri Faber, Capital | 661,650 |
Required:
1. Prepare a multiple-step income statement.
| Kanpur Co. Income Statement For the Year Ended June 30, 2019 |
|||
|---|---|---|---|
| Expenses: | |||
| Selling expenses: | |||
| Total selling expenses | |||
| Administrative expenses: | |||
| Total administrative expenses | |||
| Total operating expenses | |||
2. Prepare a statement of owner's equity.
| Kanpur Co. Statement of Owner's Equity For the Year Ended June 30, 2019 |
||
|---|---|---|
3. Prepare a balance sheet, assuming that the current portion of the note payable is $15,700.
| Kanpur Co. Balance Sheet June 30, 2019 |
|||
|---|---|---|---|
| Assets | |||
| Current assets: | |||
| Total current assets | |||
| Property, plant, and equipment: | |||
| Total property, plant, and equipment | |||
| Total assets | |||
| Liabilities | |||
| Current liabilities: | |||
| Total current liabilities | |||
| Long-term liabilities: | |||
| Total liabilities | |||
| Owner's equity | |||
| Total liabilities and owner's equity |
4. Which type of income statement shows intermediate balances?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
