(sa useu by service companies also? (SO5) C 20. Why is interest expense reported as a non- operating expense instead of as an operating expense on a multiple-step income statement? 2.950 PS-7A The unadjusted trial balance of World Enterprises for the year ending December 31, 2014, followe Prepare adjusting and WORLD ENTERPRISES closing entries and finan cial statements-perpetual Trial Balance December 31, 2014 system. Calculate ratios, (504,5,6) AP Debit Credit Cash $ 15,000 Accounts receivable 19,200 Merchandise inventory 37,050 Prepaid insurance 3,000 Supplies Equipment 150,000 Accumulated depreciation-equipment, $ 35,000 Furniture 45,000 Accumulated depreciation--furniture 18.000 Accounts payable 33,200 Unearned revenue 4.000 Mortgage payable 125.000 S. Kim, capital 46,200 S. Kim, drawings 48,000 Sales 365.000 Sales returns and allowances Sales discounts 3,275 Cost of goods sold 151.000 Interest experie 0175 Salaries expense 35.450 Utilities expense 3.100 5926,100 5516100 2.500 ACCOUNTING FOR MERCHANDISING OPERATIONS Siege Utilities expense 113000 875 450 5,100 S526,400 $526,400 248 CHAPTER ACCOUNTING FOR MERCHANDISING OPERATIONS Additional Information 1. There is $750 of supplies on hand on December 31, 2014, 2. The one year insurance policy was purchased on March 1, 2014 3. Depreciation expense for the year is $10,000 for the equipment and $4,500 for the furniture. 4. Accrued interest expense at December 31, 2014, 185675. 5. Unearned revenue of $975 is still uncerned at December 31, 2014. On the sales that were earned, cost of goods sold was $1.750. 6. A physical count of merchandise Inventory indicates $32,750 on hand on December 31, 2014 7. Of the mortgage payable, $8.500 is to be paid in 2015. 8. Seok Kim invested $5.000 cash in the business on July 19, 2014 9. Last year, the company had a gross profit margin of 35%, and profit margin of 10% Instructions (a) Prepare the adjusting journal entries assuming they are prepared annually (b) Prepare a multiple step income statement statement of owner's equity, and classified balance sheet (c) Prepare the closing entries. (d) Calculate the gross profit margin and peofit margin for 2014. Compare with the 2013 rates and comment on any trends. TAKING IT FURTHER Compare the presentation of information in a multiple step income statement for a service company with one for merchandising company. How would they be similar and how would they be different