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Multiple-Step Income Statement and Report Form of Balance Sheet

The following selected accounts and their current balances appear in the ledger of Prescott Inc. for the fiscal year ended September 30, 20Y8:

Cash		$187,875		Retained Earnings (as of Sept. 30, 20Y7)		$ 571,050
Accounts Receivable		337,500		Dividends		281,250
Inventory		850,500		Sales		8,025,750
Estimated Returns Inventory		78,750		Cost of Goods Sold		4,893,750
Office Supplies		33,750		Sales Salaries Expense		874,800
Prepaid Insurance		27,000		Advertising Expense		103,275
Office Equipment		259,200		Depreciation Expense Store Equipment		18,675
Accumulated Depreciation Office Equipment		111,375		Miscellaneous Selling Expense		4,500
Store Equipment		1,150,875		Office Salaries Expense		174,150
Accumulated Depreciation Store Equipment		420,075		Rent Expense		89,775
Accounts Payable		109,350		Insurance Expense		51,638
Customer Refunds Payable		78,750		Depreciation Expense Office Equipment		36,450
Salaries Payable		21,600		Office Supplies Expense		3,712
Note Payable (due evenly over next 5 years)		117,000		Miscellaneous Administrative		4,275
Common Stock		33,750		Interest Expense		27,000

Instructions:

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1. Prepare a multiple-step income statement.