Answer:
King Co.
1. Schedule of Cost of Goods Sold:
Merchandise inventory, January 1 $12,000
Purchases 85,000
Transportation-in 2,950
Purchase returns and allowances (2,500
)
Merchandise inventory, (10,700
)
Cost of goods sold $86,750
2. King Co.'s Multi-step Income Statement
For the year ended December 31:
Net Sales $151,500
Cost of goods sold 86,750
Gross profit $64,750
Expenses:
Miscellaneous expense 1,100
Transportation-out 2,500
Advertising expense 6,500
Salaries expense 21,600
Rent expense 8,500
Utilities expense 1,750
Total expenses $41,950
Operating income $22,800
Interest expense 450
Income before taxes $22,350
Loss on sale of land 3,500
Net Income $18,850
3. King Co's Single-step Income Statement
For the year ended December 31:
Net Sales $151,500
Cost of goods sold 86,750
Operating expenses 41,950
Interest expense 450
Loss on sale of land 3,500 132,660
Net Income $18,850
Explanation:
Data:
Sales $155,000
Sales returns and allowances (3,500)
Net Sales $151,500
Miscellaneous expense 1,100
Transportation-out 2,500
Advertising expense 6,500
Salaries expense 21,600
Rent expense 8,500
Utilities expense 1,750
Total expenses $41,950
Interest expense 450
Loss on sale of land 3,500
Transportation-in 2,950
Purchases 85,000
Purchase returns and allowances 2,500
Merchandise inventory, January 1 12,000
Merchandise inventory, 10,700
December 31
