Problem 5-3A Starz Department Store is located near the Towne Shopping Mall. At
ID: 2492077 • Letter: P
Question
Problem 5-3A Starz Department Store is located near the Towne Shopping Mall. At the end of the company's calendar year on December 31, 2014, the following accounts appeared in two of its trial balances Unadjusted Adjuste Unadjusted Adjusted $ 79,900 $104,390 65,390 68,250 55,770 377,000 377,000 30,940 145,600 145,600 536,510 536,510 30,810 31,200 143,000 143,000 9,360 11,180 7,280 Accounts Payable Accounts Receivable Accumulated Depr-Buildings Accumulated Depr- Equipment Buildings Cash Common Stock Interest Revenue Inventory Mortgage Payable 5,200 97,500 5,200 97,500 104,000 104,000 3,120 6,240 6,240 83,980 140,400 140,400 941,200 941,200 13,260 18,850 5,590 10,400 14,300 15,600 65,390 54,730 38,480 Prepaid Insurance 12,480 Property Tax Expense Property Taxes Payable Retained Earnings Salaries and Wages Expense Sales Revenue Sales Commissions Expense Sales Commissions Payable Sales Returns and Allowances Utilities Expense 30,940 83,980 Cost of Goods Sold Depreciation Expense Dividends Equipment 31,200 Insurance Expense 10,400 3,900 Interest Expense Interest Payable Prepare a multiple-step income statement. (List other revenues before other expenses.)Explanation / Answer
STARZ DEPARTMENT STORE
Income Statement
For the Year Ended December 31, 2014
Sales Revenue
$ 941,200
Less: Sales Returns and Allowance
$ 10,400
Net Sales
$ 930,800
Cost of Goods Sold
$ 536,510
Gross Profit
$ 394,290
Operating Expenses:
Insurance Expense
$ 9,360
Property Tax Expense
$ 6,240
Salaries and Wages Expense
$ 140,400
Sales Commissions Expense
$ 18,850
Utilities Expense
$ 15,600
Depreciation Expense
$ 30,810
Total Operating Expenses
$ 221,260
Income from operations
$ 173,030
Other income and expense
Interest Revenue
$ 5,200
Interest Expense
$ 11,180
Net Income
$ 167,050
STARZ DEPARTMENT STORE
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained Earnings, January 1
$ 83,980
Add: Net income
$ 167,050
$ 251,030
Less: Dividends
$ 31,200
Retained Earnings, December 31
$ 219,830
STARZ DEPARTMENT STORE
BALANCE SHEET
December 31, 2014
Assets
Non-Current Assets:
Property, Plant, and Equipment:
Buildings
$ 377,000
Less: Accumulated Depreciation
$ 68,250
$ 308,750
Equipment
$ 143,000
Less: Accumulated Depreciation
$ 55,770
$ 87,230
Total Non-Current Assets
$ 395,980
Current Assets:
Prepaid Insurance
$ 3,120
Inventory
$ 97,500
Accounts Receivable
$ 65,390
Cash
$ 30,940
Total Current Assets
$ 196,950
Total Assets
$ 592,930
Shareholders’ Equity and Liabilities
Shareholders‘ Equity:
Share Capital—Ordinary
$ 145,600
Retained earnings
$ 219,830
Total Shareholders‘ Equity
$ 365,430
Liabilities:
Non-Current Liabilities:
Mortgage Payable
$ 104,000
Total Non-Current Liabilities
$ 104,000
Current Liabilities:
Accounts Payable
$ 104,390
Interest Payable
$ 7,280
Property Taxes Payable
$ 6,240
Sales Commissions Payable
$ 5,590
Total Current Liabilities
$ 123,500
Total Liabilities
$ 227,500
Total Shareholders‘ Equity and Liabilities
$ 592,930
STARZ DEPARTMENT STORE
Income Statement
For the Year Ended December 31, 2014
Sales Revenue
$ 941,200
Less: Sales Returns and Allowance
$ 10,400
Net Sales
$ 930,800
Cost of Goods Sold
$ 536,510
Gross Profit
$ 394,290
Operating Expenses:
Insurance Expense
$ 9,360
Property Tax Expense
$ 6,240
Salaries and Wages Expense
$ 140,400
Sales Commissions Expense
$ 18,850
Utilities Expense
$ 15,600
Depreciation Expense
$ 30,810
Total Operating Expenses
$ 221,260
Income from operations
$ 173,030
Other income and expense
Interest Revenue
$ 5,200
Interest Expense
$ 11,180
Net Income
$ 167,050