The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2018: Cash Accounts receivable Inventory Estimated returns inventory Office supplies Prepaid insurance Office equipment Accumulated depreciation-office equipment Store equipment Accumulated depreciation-store equipment Accounts payable Customer refunds payable Salaries payable Note payable (final payment due 2024) Common stock Retained earnings $ 240,000 966,000 1,690,000 22,500 13,500 8,000 830,000 550,000 3,600,000 1,820,000 326,000 40,000 41,500 300,000 500,000 Dividends Sales Cost of goods sold Sales salaries expense Advertising expense Depreciation expense-store equipment Miscellaneous selling expense 2,949,100 100,000 11,343,000 7,850,000 916,000 550,000 140,000 38,000 Office salaries expense 650,000 Rent expense 94,000 94,000 Rent expense Depreciation expense-office equipment 50,000 Insurance expense 48,000 Office supplies expense 28,100 Miscellaneous administrative expense 14,500 Interest expense 21,000 Required: 1. Prepare a multiple-step income statement. In the Other income and expenses section only, enter amounts that represent other expenses as negative numbers using a minus sign.* 2. Prepare a retained earnings statement. Negative amount should be indicated by the minus sign. 3. Prepare a balance sheet, assuming that the current portion of the note payable is $50,000.* 4. Briefly explain how multiple-step and single-step income statements differ. * Be sure to complete the statement headings. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (.) will automatically appear if it is required. Labels Administrative expenses Current assets Current liabilities For the Year Ended May 31, 2018 Long-term liabilities May 31, 2018 Operating expenses Other revenue and expense Property, plant, and equipment Selling expenses Amount Descriptions Change in retained earnings Gross profit Income from operations Dividends Net income Net income for the year Net loss Net loss for the year Note payable (current portion) Retained earnings, June 1, 2017 Retained earnings, May 31, 2018 Total administrative expenses Total assets Total assets Total current assets Total current liabilities Total liabilities Total liabilities and stockholders' equity Total operating expenses Total property, plant, and equipment Total selling expenses Total stockholders' equity Income Statement 1 Sales 2 Cost of goods sold $11,343,000.00 7,850,000.00 $3,493,000.00 6 $916,000.00 7 3 Gross profit 4 Sales salaries expense: 5 Selling expenses: Sales salaries expense Advertising expense Depreciation expense-store equipment Miscellaneous selling expense Total selling expenses 11 Administrative expenses: 550,000.00 140,000.00 8 9 38,000.00 10 $650,000.00 12 Office salaries expense 13 94,000.00 50,000.00 14 15 48,000.00 16 28,100.00 17 Rent expense Depreciation expense-office equipment Insurance expense Office supplies expense Miscellaneous administrative expense Total administrative expenses Income from operations 20 Office supplies expense 21 (Label) 14,500.00 18 190,000.00 19 190,000.00 $190,000.00 22 Interest expense (2,549,600.00) 23 Net income $943,400.00 Balance Sheet Clairemont Company Score: 1617235 Balance Sheet (Label) 1 Assets 2 Current assets: 3 Cash $240,000.00 4 Accounts receivable 96,000.00 5 Inventory 1,690,000.00 6 Estimated returns inventory Office supplies Prepaid insurance 22,500.00 13,500.00 7 8 8,000.00 9 Total current assets $2,940,000.00 11 $830,000.00 12 10 (Label) Office equipment Accumulated depreciation Office equipment 13 Store equipment Accumulated depreciation Store equipment (550,000.00) $3,600,000.00 (1,820,000.00) 14 15 2,060,000.00 Estimated returns inventory 16 Total assets $5,000,000.00 17 Liabilities 18 Current liabilities: 19 Accounts payable $326,000.00 20 Salaries payable Customer refunds payable 41,500.00 40,000.00 21 22 21 Customer refunds payable 40,000.00 22 23 24 (Label) 25 27 26 total liabilities and stockholders Stockholders' Equity 28 Common stock 29 Retained earnings, May 31, 2018 30 Total owner's equity 31 Total liabilities and owners equity $500,000.00 3,792,500.00 4,292,500.00 $5,000,000.00