Assume that you have been hired by Big Sky Corporation as a summer intern. The company is in the process of preparing its annual financial statements. To help in the process, you are asked to prepare an income statement for internal reporting purposes and an income statement for external reporting purposes. Your boss has also requested that you determine the company's gross profit percentage based on the statements that you are to prepare. The following adjusted trial balance was created from the general ledger accounts on May 31, 2014.

Your boss wants you to create the spreadsheet in a way that automatically recalculates net sales and any other related amounts whenever changes are made to the contra-revenue accounts. To do this, you know that you'll have to use formulas throughout the worksheets and even import or link cells from one worksheet to another. Once again, your friend Owen is willing to help.
From: Owentheaccountant@yahoo.com
To: Helpme@hotmail.com
Cc:
Subject: Excel-Help
Sounds like you are going to get some great experience this summer. Okay, to import a number from another spread- sheet, you first click on the cell where you want the number to appear. For example, if you want to enter the Net Sales balance in the external income statement, click on the cell in the external income statement where the Net Sales number is supposed to appear. Enter the equals sign (=) and then click on the tab that takes you to the worksheet containing the internal income statement. In that worksheet, click on the cell that contains the amount you want to import into the external income statement and then press Enter. This will create a link from the internal income statement cell to the external income statement cell. Here's a screen shot showing the formula that will appear after you import the number.

Don't forget to save the file using a name that indicates who you are.
Required
Enter the trial balance information into a spreadsheet and complete the following:
1. Prepare a multi-step income statement that would be used for internal reporting purposes. Classify sales returns and allowances and sales discounts as contra-revenue accounts.
2. Prepare a multi-step income statement that would be used for external reporting purposes, beginning with the amount for Net Sales.
3. Compute the gross profit percentage?

Transcribed Image Text:

Account Titles Debits Credits $ 57,000 Cash Accounts Receivable 67,000 103,000 252,000 Inventory Property and Equipment Accumulated Amortization $103,000 75,000 Liabilities Contributed Capital Retained Earnings, June 1, 2013 Sales Revenue 120,000 145,900 369,000 Sales Returns and Allowances 9,500 Sales Discounts 14,000 248,000 19,000 Cost of Goods Sold Selling Expense Administrative Expense General Expenses Income Tax Expense 23,000 5,000 15,400 $812,900 $812,900 Totals S6-7 - Microsoft Excel х Home Insert Page Layout Formulas Data Review View f ='Internal Income Statement'IG8 н G5 Big Sky Corporation Income Statement For the Year Ended May 31, 2014 5 Net sales 6 Cost of goods sold 7 Gross profit 345,500 248,000 External Income Statement GI EOU 100% Internal Income Statement Ready 234 567Co