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Problem on Multiple Step Income Statement, Owners Equity Statement and Classified Balancesheet

1. The trial balance of Kevin Poorten Fashion Centre contained the following accounts at November30, 2011 of the companys fiscal year.

Kevin Poorten Fashion CentreTrial Balance

November 30, 2011

Debit CreditCash 26,700Accounts Receivable 30,700Merchandise Inventory (Nov 30, 2011) 44,700Store Supplies 6,200Store Equipment 85,000Accumulated Depreciation-Store Equipment 18,000Delivery Equipment 48,000Accumulated Depreciation- Delivery Equipment 6,000

Notes Payable 51,000Accounts Payable 48,500Kevin Poorten, Capital 110,000Kevin Poorten, Drawing 12,000Sales 759,200Sales Returns and Allowances 8,800Cost of Goods Sold 497,400Salaries Expenses 140,000Advertising Expenses 26,400

Utility Expenses 14,000Repair Expenses 12,100Delivery Expenses 16,700Rent Expenses 24,000Total 992,700 992,700

Adjustment Data:1. Store supplies on hand totaled Tk.3, 500.2. Depreciation is Tk. 9,000 on the store equipment and Tk. 6,000 on the delivery equipment.3. Interest of Tk. 4,080 is accrued on the notes payable at November 30.

Other Data:

1. Salaries expenses 70% selling and 30% administrative.2. Rent expense and utilities expenses are 80% selling and 20% administrative.3. Tk. 30,000 of notes payable are due for payment next year.4. Repair expense is 100% administrative.

Required:a. Prepare a multiple step income statement and an owners equity statement for the year. b. Classified balance sheet as of November 30, 2011

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SolutionReq:a

Kevin Poorten fashion CentreClassified Income Statement

For the year ended November 30, 2011

Particular Amount Amount Amount

Sales .. Less: Sales returns & allowance... Net sales...

Less: Cost of goods sold (COGS) Gross Profit

Less: Operating ExpensesAdministrative Expenses

Salary expenses (140,000*30).. Utility expenses (14000*20) Repair expenses ... Rent expenses (24000*20)... Supplies.. Total administrative expense.

Selling expenses

Salary expenses (140,000*70).. Utility expenses (14 000*80) Rent expenses (24000*80)... Advertising expenses Delivery expenses.. Depreciation expense (store equipment)... Depreciation expense (delivery van)... ......

Total Operating expense

Total operating income/ income fromoperation .. Less: Non-operating expensesInterest expense.

Net Loss..

420002800

1210048002700

980001120019200264001670090006000

759200(8800)

64400

186500

750400

497400253000

(250900)

2100

(4080)

(1980)

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Kevin Poorten fashion Centre

Owners Equity StatementFor the year ended November 30, 2011

Particular Amount

Kevin Poorten Capital Less: Net Loss

Less: Drawings .. Kevin Poorten, Capital (ending)

110000(1980)108020(12000)96020

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Solution: Req (b)Kevin Poorten fashion Centre

Balance SheetNovember 30, 2011

Particular Amount Amount

Current asset:Cash Accounts receivable... Merchandise inventory (ending).... Store supplies. Total current asset ...

Long term investment:

Property, plant & Equipment (PPE):

Store equipment 85000 Less: Accumulated depreciation.. 27000

Delivery equipment 48000 Less: Accumulated depreciation 12000Total PPE .

Intangible asset :

Total Asset

Liabilities & owners equity

Liability:

Current liability: Notes payable (51000- 30000) Accounts payable... Interest payable.. Total current liability

Long term liability Notes payable

Owners equity

Kevin Poorten ending capital.

2670030700447003500

58000

36000

21000485004080

105,600

0

94,000

0

199,600

73,500

30,000

96020199600

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