Multi-Step Income Statement with Vertical Analysis Exam Instructions

Prepare a multi-step vertical analysis income statement for Banning Merchandising Co. as of the year ended December 31, 2021. Create a 4-column table with the first column as wide as possible for the line item descriptions. Use column 2 for detail, column 3 for nets, sub-totals, & totals, and column 4 for the vertical-analysis percentages to the nearest tenth. After the net income skip a couple of rows and give the number of outstanding shares and earnings per share.

Headers and sub-headers should be left justified and dollars and percentages should be right justified using $, %, and underlining as appropriate. Double underlining is not available so bold and single underline the net income. Abbreviations should be avoided on financial statements.

Not all the accounts listed below belong on the income statement.

General Ledger Accounts with their Normal Balances:

• Accounts payable $24,500
• Accounts receivable 49,000
• Cash 23,000
• Cost of goods sold 415,000
• General & administrative expenses 236,000
• Inventory 38,700
• Income taxes 25,220
• Other non-operating revenues & gains 6,500
• Other non-operating expenses & losses 4,400
• Prepaid expenses 2,600
• Sales revenue 890,000
• Selling expenses 115,000

Common shares issued 60,000 Common shares in treasury 1,550