Business Level 3 Unit 4 P4

Chapter 4 accounting for merchandising BUSINESSES Problems
P4–1
1.
AQUA CO.
Income Statement
For the Year Ended June 30, 20Y8

Revenue from sales: Sales $ 3,625,000 Less: Sales returns and allowances $ 37,800 Sales discounts 20,200 58,000 Net sales $ 3,567,000
Cost of merchandise sold 2,175,000
Gross profit $ 1,392,000
Operating expenses: Selling expenses: Sales salaries expense $ 388,800 Advertising expense 45,900 Depreciation expense—store equipment 8,300 Miscellaneous selling expense 2,000 Total selling expenses $ 445,000 Administrative expenses: Office salaries expense $ 77,400 Rent expense 39,900 Insurance expense 22,950 Depreciation expense—office equipment 16,200 Office
a. The multiple-step form of income statement contains various sections for revenues and expenses, with intermediate balances, and concludes with net income. In the single-step form, the total of all expenses is deducted from the total of all revenues. There are no intermediate balances.

b. In the report form of balance sheet, the assets, liabilities, and stockholders’ equity are presented in that order in a downward sequence. In the account form, the assets are listed on the left-hand side, and the liabilities and stockholders’ equity are listed on the right-hand side.
P4–2
1.
AQUA CO.
Income Statement
For the Year Ended June 30, 20Y8

Revenues: Net sales $ 3,567,000
Expenses:
Cost of merchandise sold $ 2,175,000 Selling expenses 445,000 Administrative expenses 160,000 Interest expense 12,000 Total expenses 2,792,000
Net income $ 775,000