Reference no: EM131607409

Question:

Purpose of Assignment

The purpose of this assignment is to help you become familiar with the parts of the multiple-step income statement.

Assignment Steps

Resources: Financial Accounting: Tools for Business Decision Making

Scenario: An inexperienced accountant prepared this condensed income statement for Simon Company, a retail firm that has been in business for a number of years.

SIMON COMPANY

Income Statement
For the Year Ended December 31, 2017

Revenues

Net sales $850,000
Other revenues 22,000      872,000
Cost of goods sold 555,000
Gross profit 317,000
Operating expenses

Selling expenses 109,000

Administrative expenses 103,000               212,000
Net earnings $105,000

As an experienced, knowledgeable accountant, you review the statement and determine the following facts:

Net sales consist of: sales $911,000, less freight-out on merchandise sold $33,000, and sales returns and allowances $28,000.
Other revenues consist of sales discounts $18,000 and rent revenue $4,000.

Selling expenses consist of salespersons'' salaries $80,000, depreciation on equipment $10,000, advertising $13,000, and sales commissions $6,000. The commissions represent commissions paid. At December 21, $3,000 of commissions have been earned by salespersons but have not been paid. All compensation should be recorded as Salaries and Wages Expense.

Administrative expenses consist of office salaries $47,000, dividends $18,000, utilities $12,000, interest expense $2,000, and rent expense $24,000, which includes prepayments totaling $6,000 for the first quarter of 2018.

Prepare a detailed multi-step income statement assuming a 25% tax rate. Write a brief explanation of 200 words on how the experienced accountant was able to determine the facts noted in the instructions. This explanation should be included on the Excel® spreadsheet provided in correct sentence structure.

Brief Explanation of 200 to 350 words on how the experienced accountant was able to determine the facts noted in the instructions.

Attachment:- Assignment individual.rar