Intermediate Accounting I

INSTRUCTIONS

Prepare a multiple-step income statement based on the following account balances:

Sales $1,300,000

Allowance for doubtful accounts 45,000

Bad debt expense 30,000

Beginning inventory 40,000

Ending inventory 30,000

Depreciation expense 90,000

Dividends declared 25,000

Freight in 20,000

Freight out 18,000

Loss from discontinued operations 80,000

Loss from earthquake damage 22,000

Loss from sale of Available for Sale securities 7,000

Lottery winnings 50,000

Prepaid insurance 25,000

Purchases 600,000

Purchase returns 20,000

Purchase discounts 10,000

Rent expense 100,000

Salary expense 240,000

Sales returns 20,000

Sales discounts 8,000

Unrealized loss from Available for Sale securities 42,000

Unrealized gain from Trading securities 25,000

Unearned rent revenue 15,000

Income tax rate 20%