Problem on Multiple Step Income Statement, Owners Equity Statement and Classified Balance

sheet
1. The trial balance of Kevin Poorten Fashion Centre contained the following accounts at November
30, 2011 of the companys fiscal year.
Kevin Poorten Fashion Centre
Trial Balance
November 30, 2011

Cash
Accounts Receivable
Merchandise Inventory (Nov 30, 2011)
Store Supplies
Store Equipment
Accumulated Depreciation-Store Equipment
Delivery Equipment
Accumulated Depreciation- Delivery Equipment
Notes Payable
Accounts Payable
Kevin Poorten, Capital
Kevin Poorten, Drawing
Sales
Sales Returns and Allowances
Cost of Goods Sold
Salaries Expenses
Advertising Expenses
Utility Expenses
Repair Expenses
Delivery Expenses
Rent Expenses
Total

Debit
26,700
30,700
44,700
6,200
85,000

Credit

18,000
48,000
6,000
51,000
48,500
110,000
12,000
759,200
8,800
497,400
140,000
26,400
14,000
12,100
16,700
24,000
992,700

992,700

Adjustment Data:
1. Store supplies on hand totaled Tk.3, 500.
2. Depreciation is Tk. 9,000 on the store equipment and Tk. 6,000 on the delivery equipment.
3. Interest of Tk. 4,080 is accrued on the notes payable at November 30.
Other Data:
1. Salaries expenses 70% selling and 30% administrative.
2. Rent expense and utilities expenses are 80% selling and 20% administrative.
3. Tk. 30,000 of notes payable are due for payment next year.
4. Repair expense is 100% administrative.
Required:
a. Prepare a multiple step income statement and an owners equity statement for the year.
b. Classified balance sheet as of November 30, 2011

Solution
Req:a
Kevin Poorten fashion Centre
Classified Income Statement
For the year ended November 30, 2011

Particular

Amount

Sales..
Less: Sales returns & allowance...
Net sales...

Amount
759200
(8800)

750400

Less: Cost of goods sold (COGS)

Gross Profit
Less: Operating Expenses
Administrative Expenses
Salary expenses (140,000*30)..
Utility expenses (14000*20)
Repair expenses ...
Rent expenses (24000*20)...
Supplies..
Total administrative expense.

Amount

497400
253000

42000
2800
12100
4800
2700
64400

Selling expenses
Salary expenses (140,000*70)..
Utility expenses (14000*80)
Rent expenses (24000*80)...
Advertising expenses
Delivery expenses..
Depreciation expense (store equipment)...
Depreciation expense (delivery van).........

98000
11200
19200
26400
16700
9000
6000
186500

Total Operating expense

(250900)

Total operating income/ income from

operation..
Less: Non-operating expenses
Interest expense.

(4080)

Net Loss..

(1980)

2100

Kevin Poorten fashion Centre

Owners Equity Statement
For the year ended November 30, 2011

Particular
Kevin Poorten Capital
Less: Net Loss
Less: Drawings..
Kevin Poorten, Capital (ending)

Amount
110000
(1980)
108020
(12000)
96020

Solution: Req (b)

Kevin Poorten fashion Centre
Balance Sheet
November 30, 2011

Particular
Current asset:
Cash
Accounts receivable...
Merchandise inventory (ending)....
Store supplies.
Total current asset...

Amount

Amount

26700
30700
44700
3500
105,600

Long term investment:

Property, plant & Equipment (PPE):

Store equipment85000
Less: Accumulated depreciation..27000
Delivery equipment48000
Less: Accumulated depreciation12000
Total PPE.

58000

36000
94,000

Intangible asset:

Total Asset

199,600

Liabilities & owners equity

Liability:
Current liability:
Notes payable (51000-30000)
Accounts payable...
Interest payable..
Total current liability
Long term liability
Notes payable

21000
48500
4080
73,500

30,000

Owners equity
Kevin Poorten ending capital.

96020
199600