Multi-step Income Statement and Adjusting Entries

Washington Distributors, whose accounting year ends on December 31, had the following normal balances in its ledger accounts at December 31.

During the year, the accounting department prepared monthly statements but no adjusting entries were made in the journals and ledgers. Data for the year-end procedures are as follows:

b. Prepare a multi-step income statement for the year. Combine all the operating expenses into one line on the income statement for selling, general and administrative expenses.

Cash Accounts Receivable Inventory Prepaid Insurance Office Supplies Furniture & Fixtures Accumulated Depreciation - Furn. & Fixtures Delivery Equipment Accumulated Depreciation - Delivery Equipment Accounts Payable Long-term Notes Payable Income tax expense Common Stock Retained Earnings Sales Revenue Cost of Goods Sold Utilities Expense Sales Salaries Expense Delivery Expense Advertising Expense Rent Expense Office salaries expense $45,750 92,000 84,400 7,200 4,800 28,000 10,800 70,000 24,400 69,400 30,000 11,000 $125,000 ? 1,170,000 822,200 5,600 108,000 37,000 28,200 30,000 72,000 1. Prepaid Insurance, December 31 $2,800 2. Depreciation Expense on furniture and fixtures for year 3,000 3. Depreciation Expense on delivery equip. for the year 10,000 4. Salaries Payable, December 31 ($2,300 Sales and $800 Office) 3,100 5. Office Supplies on hand, December 31 1,900 WASHINGTON DISTRIBUTORS Income Statement For the Year Ended December 31 Sales Revenue Cost of Goods Sold Gross Profit on Sales Operating Expenses Selling, General, and Administrative Expense Income before Income Taxes Income Tax Expense Net Income $ 1,170,000 822,200 347,800 301,000 x 11,400 x 11,000 0 X $