(f) 300 300 860 860 4,000 23,900 300 860 4,000 23,900 4,000 23,900 1,200 1,200 1,200 15,000 (a) 15,000 (b) 16,500 15,000 16,500 71,510 16,500 71,510 71,510 1,340 1,340 40,660 1,340 40,660 40,660 1,020 Wages Payable Sales Tax Payable Mortgage Payable B. Paulson, Capital B. Paulson, Drawing Income Summary Sales Sales Returns and Allowances Purchases Purchases Returns and Allowances Purchases Discounts Freight-In Wages Expense Advertising Expense Supplies Expense Phone Expense Utilities Expense Insurance Expense Depr. Expense-Equipment Miscellaneous Expense 1,020 800 1,020 800 800 400 22,300 (1) 300 300 400 22,600 300 200 684 716 (c) 200 400 22,600 300 200 684 716 150 450 150 684 716 (d) 150 (e) 450 150 450 150 150 150 Miscellaneous Expense Interest Expense 150 80 107,430 107,430 32,600 32,600 124,680 124,680 150 80 82,730 7,100 89,830 89,830 41,950 Net Income 34,850 7,100 41,950 89,830 41,950 Required: Multiple-Step Income Statement 1. Prepare a multiple-step income statement. Paulson's Pet Store Income Statement For Year Ended December 31, 20- Revenue from sales: Sales s 71,510 1,340 Less sales returns and allowances Net sales $ 70,170 Cost of goods sold: Merchandise inventory, January 1, 20- $ 15,000 Purchases $ 40,660 Purchases $ 40,660 Less purchases returns and allowances $ 1,020 300 Less purchases discounts Net purchases $ 1,820 38,840 400 Add freight-in Cost of goods purchased 39,240 Goods available for sale 54,240 Less merchandise inventory, December 31, 20- 16,500 Cost of goods sold 37,740 Gross profit $ 32,430 Operating expenses: Wages expense 22,600 300 Advertising expense Supplies expense 200 Phone expense 634 Utilities expense 716 Insurance expense Depreciation expense-equipment Depreciation expense-equipment Miscellaneous expense 150 Total operating expenses Income from operations 25,250 $7,180 Other expenses: Interest expense 30 Net incol dropdown $ 7,100 Feedback Check My Work Income Statement Net sales (with details) -Cost of goods sold (with details) = Gross profit -Operating expenses = Income from operations + Other revenues + Other revenues -Other expenses = Net income (loss). It is important to have a solid understanding of the sequence of the above components of a multiple-step income statement. Refer to Figure 15-3 in the text. Owner's Equity Statement 2. Prepare a statement of owner's equity Paulson's Pet Store Statement of Owner's Equity For Year Ended December 31, 20-- B. Paulson, capital, January 1, 20- $ 21,900 Add additional investment 23,900 Total investment Net income for the year Less withdrawals for the year Increase in capital Less withdrawals for the year Increase in capital B. Paulson, capital, December 31, 20- 1,200 x Feedback Check My Work Refer to Figures 15-4 and 15-5 in the text. Balance Sheet 3. Prepare a balance sheet. Paulson's Pet Store Balance Sheet December 31, 20- Assets Current assets: Cash $ 15,860 2,340 Accounts receivable Merchandise inventory 16,500 Supplies Prepaid insurance Prepaid insurance 450 $ 35,750 Total current assets Property, plant, and equipment: Equipment 5,000 Less accumulated depreciation 900 5,900 X Total assets $ 41,650 X Liabilities Current liabilities: Accounts payable $ Wages payable 4,890 300 860 500 Sales tax payable Mortgage payable (current portion) $ 6,550 Total current liabilities Long-term liabilities: Mortgage payable $ 4,000 500 Less current portion 2,550 X Total liabilities 50 X Owner's Equity B. Paulson, capital 21,900 x Total liabilities and owner's equity