Styles Paragraph Problem 2..he following account balances were included in the t
ID: 2340524 • Letter: S
Question
Styles Paragraph Problem 2..he following account balances were included in the trial balance of Castle Corporation at June 30 2017 $2,100,500 12,680 Depreciation expense(office Sales revenue Sales discounts $8,680 12,900 8,630 and equipment) Property tax expense Bad debt expense (selling) Maintenance and repairs Cost of goods sold Salaries and wages expense(sales) Sales commissions Travelexpense(salespersons) Freight-out Entertainment expense Telephone and Internetexpense (sales) Depreciation expense (sales equipment) 1,490,300 54,600 135,800 41,600 31,800 21,930 11,300 3,500 2,900 6,570 2,900 expense (administration 4,860 Office expense Sales returns and allowance Dividends received Interest expense Income taxexpense Depreciation overstatement 7,500 36,870 21,000 37,500 68,000 Miscellaneous expenses (sales) Office supplies used Telephone and Internetexpense due to error-2015 (net of tax) 31,000 Dividends declared on (administration) 4,900 preferred stock 15,000 Dividends declared on C/s 45,000 The Retained Earnings account had a balance of $468,000 at July 1, 2016. There are 150,000 shares of common stock outstanding. Instructions Using the multiple-step form, prepare an income statement and aretained earnings statement for the year ended June 30, 2017. (a) (b) Using the single-step form, prepare an income statement and a retained earnings statement for the year ended June 30, 2017 COMPACExplanation / Answer
Multiple Income Statement
Castle Corporation
Income Statement
For the year ended 30th June 2017
Particulars
Amount($)
Amount($)
Sales Revenue
2,100,500
Less: Sales Discounts
12,680
Less: Sales returns and allowances
36,870
2,050,950
Less: Cost of goods sold
1,490,300
Gross profit
560,650
Operating Expenses
Selling Expenses
Salary and wages expense (sales)
54,600
Sales commission
135,800
Travel expense (sales person)
41,600
Freight -out
31,800
Telephone and internet (sales)
11,300
Depreciation expenses (sales)
3,500
Maintenance and repairs (sales)
2,900
Miscellaneous expenses sales
6,570
Bad Debt expense (selling)
8,630
296,700
Administration Expenses
Entertainment Expense
21,930
Office supplies used
2,900
Telephone and internet (administration)
4,900
Depreciation expenses (administration)
8,680
Maintenance and repairs (administration)
4,860
Office expenses
7,500
Property tax expenses
12,900
63,670
Total operating expenses
360,370
Operating income
200,280
Non-operating
Dividend received
21,000
Interest expenses
(37,500)
Total non-operating income
(16,500)
Total profit pre tax
183,780
Less : Income Taxes
68,000
Net profit
115,780
Less: Dividend declared on preferred stock
(15,000)
Net profit available for common stockholders
100,780
Single Income Statement
Castle Corporation
Income Statement
For the year ended 30th June 2017
Particulars
Amount($)
Revenue and Income
Sales Revenue
2,100,500
Less: Sales Discounts
(12,680)
Less: Sales returns and allowances
(36,870)
Dividend received
21,000
Total Income
2,071,950
Expenses and Losses
Cost of goods sold
1,490,300
Salary and wages expense (sales)
54,600
Sales commission
135,800
Travel expense (sales person)
41,600
Freight –out
31,800
Telephone and internet (sales)
11,300
Depreciation expenses (sales)
3,500
Maintenance and repairs (sales)
2,900
Miscellaneous expenses sales
6,570
Bad Debt expense (selling)
8,630
Entertainment Expense
21,930
Office supplies used
2,900
Telephone and internet (administration)
4,900
Depreciation expenses (administration)
8,680
Maintenance and repairs (administration)
4,860
Office expenses
7,500
Property tax expenses
12,900
Interest expenses
37,500
Income Taxes
68,000
Total expenses
1,956,170
Net profit
115,780
Less: Dividend declared on preferred stock
(15,000)
Net profit available for common stockholders
100,780
Castle Corporation
Statement of Retained Earnings
For the year ended 30th June 2017
Particulars
Amount ($)
Balance as at 1st July 2016
486,000
Add: Rectification of error
31,000
Add: Current year profit
100,780
Less: Dividend declared
(45,000)
Balance as at 30th June 2017
572,780
Notes:
It will be adjusted in retained earnings statement.
Also depreciation was overstated, that means profit of previous year was understated
hence in current year it has been added in retained earnings balance
Hence it has not been included in retained earnings statement.
Multiple Income Statement
Castle Corporation
Income Statement
For the year ended 30th June 2017
Particulars
Amount($)
Amount($)
Sales Revenue
2,100,500
Less: Sales Discounts
12,680
Less: Sales returns and allowances
36,870
2,050,950
Less: Cost of goods sold
1,490,300
Gross profit
560,650
Operating Expenses
Selling Expenses
Salary and wages expense (sales)
54,600
Sales commission
135,800
Travel expense (sales person)
41,600
Freight -out
31,800
Telephone and internet (sales)
11,300
Depreciation expenses (sales)
3,500
Maintenance and repairs (sales)
2,900
Miscellaneous expenses sales
6,570
Bad Debt expense (selling)
8,630
296,700
Administration Expenses
Entertainment Expense
21,930
Office supplies used
2,900
Telephone and internet (administration)
4,900
Depreciation expenses (administration)
8,680
Maintenance and repairs (administration)
4,860
Office expenses
7,500
Property tax expenses
12,900
63,670
Total operating expenses
360,370
Operating income
200,280
Non-operating
Dividend received
21,000
Interest expenses
(37,500)
Total non-operating income
(16,500)
Total profit pre tax
183,780
Less : Income Taxes
68,000
Net profit
115,780
Less: Dividend declared on preferred stock
(15,000)
Net profit available for common stockholders
100,780
Single Income Statement
Castle Corporation
Income Statement
For the year ended 30th June 2017
Particulars
Amount($)
Revenue and Income
Sales Revenue
2,100,500
Less: Sales Discounts
(12,680)
Less: Sales returns and allowances
(36,870)
Dividend received
21,000
Total Income
2,071,950
Expenses and Losses
Cost of goods sold
1,490,300
Salary and wages expense (sales)
54,600
Sales commission
135,800
Travel expense (sales person)
41,600
Freight –out
31,800
Telephone and internet (sales)
11,300
Depreciation expenses (sales)
3,500
Maintenance and repairs (sales)
2,900
Miscellaneous expenses sales
6,570
Bad Debt expense (selling)
8,630
Entertainment Expense
21,930
Office supplies used
2,900
Telephone and internet (administration)
4,900
Depreciation expenses (administration)
8,680
Maintenance and repairs (administration)
4,860
Office expenses
7,500
Property tax expenses
12,900
Interest expenses
37,500
Income Taxes
68,000
Total expenses
1,956,170
Net profit
115,780
Less: Dividend declared on preferred stock
(15,000)
Net profit available for common stockholders
100,780
Castle Corporation
Statement of Retained Earnings
For the year ended 30th June 2017
Particulars
Amount ($)
Balance as at 1st July 2016
486,000
Add: Rectification of error
31,000
Add: Current year profit
100,780
Less: Dividend declared
(45,000)
Balance as at 30th June 2017
572,780
Notes:
- Depreciation overstatement due to error will not impact current year profit.
It will be adjusted in retained earnings statement.
Also depreciation was overstated, that means profit of previous year was understated
hence in current year it has been added in retained earnings balance
- Number of shareholders is mentioned in question and not the par value.
Hence it has not been included in retained earnings statement.