PR 6-1B Multiple-step income statement and report form of balance sheet
The following selected accounts and their current balances appear in the ledger of Black
Lab Co. for the fiscal year ended April 30, 2012:
| Cash | $ 42,000 | Sales Returns and Allowances | $ 40,000 |
| Accounts Receivable | 150,000 | Sales Discounts | 15,000 |
| Merchandise Inventory | 180,000 | Cost of Merchandise Sold | 1,855,000 |
| Office Supplies | 5,000 | Sales Salaries Expense | 400,000 |
| Prepaid Insurance | 12,000 | Advertising Expense | 120,000 |
| Office Equipment | 120,000 | Depreciation Expense— | |
| Accumulated Depreciation— | Store Equipment | 15,000 | |
| Office Equipment | 28,000 | Miscellaneous Selling Expense | 18,000 |
| Store Equipment | 500,000 | Office Salaries Expense | 240,000 |
| Accumulated Depreciation— | Rent Expense | 38,000 | |
| Store Equipment | 87,500 | Insurance Expense | 24,000 |
| Accounts Payable | 48,500 | Depreciation Expense— | |
| Salaries Payable | 4,000 | Office Equipment | 7,000 |
| Note Payable | Office Supplies Expense | 4,000 | |
| (fi nal payment due 2032) | 140,000 | Miscellaneous Administrative Exp. | 6,000 |
| Cindy Worley, Capital | 386,000 | Interest Expense | 8,000 |
| Cindy Worley, Drawing | 45,000 | ||
| Sales | 3,150,000 |
Instructions
1. Prepare a multiple-step income statement.
2. Prepare a statement of owner’s equity.
3. Prepare a report form of balance sheet, assuming that the current portion of the note payable is $7,000.
4. Briefly explain (a) how multiple-step and single-step income statements differ and (b) how report-form and account-form balance sheets differ.
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