PR 5-5A Multiple-step income statement and report form of balance sheet
The following selected accounts and their current balances appear in the ledger of Gloucester Co. for the fiscal year ended August 31, 2014:
| Cash | $125,000 | Sales | $4,576,000 |
| Accounts Receivable | 335,000 | Sales Returns and Allowances | 31,000 |
| Merchandise Inventory | 380,000 | Sales Discounts | 28,000 |
| Office Supplies | 12,000 | Cost of Merchandise Sold | 2,650,000 |
| Prepaid Insurance | 9,000 | Sales Salaries Expense | 745,000 |
| Office Equipment | 275,000 | Advertising Expense | 205,000 |
| Accumulated Depreciation— | Depreciation Expense— | ||
| Office Equipment | 187,000 | Store Equipment | 40,000 |
| Store Equipment | 859,000 | Miscellaneous Selling Expense | 18,000 |
| Accumulated Depreciation— | Office Salaries Expense | 410,000 | |
| Store Equipment | 293,000 | Rent Expense | 60,000 |
| Accounts Payable | 193,000 | Depreciation Expense— | |
| Salaries Payable | 12,000 | Office Equipment | 30,000 |
| Note Payable | Insurance Expense | 18,000 | |
| (final payment due 2037) | 400,000 | Office Supplies Expense | 11,000 |
| Capital Stock | 125,000 | Miscellaneous Administrative Exp. | 8,000 |
| Retained Earnings | 550,000 | Interest Expense | 12,000 |
| Dividends | 75,000 | ||
Instructions
1. Prepare a multiple-step income statement.
2. Prepare a retained earnings statement.
3. Prepare a report form of balance sheet, assuming that the current portion of the note payable is $16,000.
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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