The unadjusted trial balance of World Enterprises for the year ended December 31, 2024, follows:

Additional information:
1. There is $750 of supplies on hand on December 31, 2024.
2. The one-year insurance policy was purchased on March 1, 2024.
3. Depreciation expense for the year is $10,000 for the equipment and $4,500 for the furniture.
4. Accrued interest expense at December 31, 2024, is $675.
5. Unearned revenue of $975 is still unearned at December 31, 2024. On the amount that was earned, cost of goods sold was $1,750.
6. A physical count of merchandise inventory indicates $32,750 on hand on December 31, 2024.
7. World Enterprises uses the perpetual inventory system and the earnings approach.

Instructions
a. Prepare the adjusting entries assuming they are prepared annually and update account balances.
b. Prepare a multiple-step income statement.
c. Prepare a single-step income statement.
d. Prepare the closing entries.

Taking It Further

Compare a single-step income statement and a multiple-step income statement for a merchandising company. How are they similar and different? Comment on the usefulness of each one.

Transcribed Image Text:

Cash Accounts receivable Merchandise inventory Prepaid insurance Supplies WORLD ENTERPRISES Trial Balance December 31, 2024 Equipment Accumulated depreciation-equipment Furniture Accumulated depreciation-furniture Accounts payable Unearned revenue Mortgage payable S. Kim, capital S. Kim, drawings Sales Sales returns and allowances Sales discounts Cost of goods sold Interest expense Salaries expense Utilities expense Debit $ 15,000 19,200 37,050 3,000 2,950 150,000 45,000 48,000 2,500 3,275 153,000 6,875 35,450 5,100 $526,400 Credit $ 35,000 18,000 33,200 4,000 125,000 46,200 265,000 $526,400