Who is good with Accounting?

Who is good with Accounting?
Purpose of Assignment
The purpose of this assignment is to help you become familiar with the parts of the multiple‐step income statement.
Assignment Steps
Resources: Financial Accounting: Tools for Business Decision Making
Scenario: An inexperienced accountant prepared this condensed income statement for Simon Company, a retail firm that has been in business for a number of years.

SIMON COMPANY
Income Statement

For the Year Ended December 31, 2017

Revenues

Net sales
$850,000
Other revenues
22,000

872,000
Cost of goods sold
555,000
Gross profit
317,000
Operating expenses

Selling expenses
109,000
Administrative expenses
103,000

212,000
Net earnings
$105,000
As an experienced, knowledgeable accountant, you review the statement and determine the following facts:
Net sales consist of: sales $911,000, less freight-out on merchandise sold $33,000, and sales returns and allowances $28,000.
Other revenues consist of sales discounts $18,000 and rent revenue $4,000.
Selling expenses consist of salespersons’ salaries $80,000, depreciation on equipment $10,000, advertising $13,000, and sales commissions $6,000. The commissions
represent commissions paid. At December 21, $3,000 of commissions have been earned by salespersons but have not been paid. All compensation should be recorded as
Salaries and Wages Expense.
Administrative expenses consist of office salaries $47,000, dividends $18,000, utilities $12,000, interest expense $2,000, and rent expense $24,000, which includes
prepayments totaling $6,000 for the first quarter of 2018.
Prepare a detailed multi-step income statement with a brief explanation of 700 words. Assume a 25% tax rate.
Show your work on the Excel® spreadsheet and submit with your explanation.

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