Multiple-Step Income Statement

Multiple-Step Income Statement

On March 31, 20Y9, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture store, are as follows:

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Accounts Receivable $170,000 Inventory $1,019,950
Accumulated Depreciation—Building 762,600 Notes Payable 273,300
Administrative Expenses 559,700 Office Supplies 19,950
Building 2,619,300 Retained Earnings 1,337,850
Cash 166,750 Salaries Payable 7,900
Common Stock 291,750 Sales 6,440,950
Cost of Goods Sold 3,769,900 Selling Expenses 709,650
Dividends 172,550 Store Supplies 93,100
Interest Expense 10,150

a. Prepare a multiple-step income statement for the fiscal year ended March 31, 20Y9.

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Royal Furnishings Company
Income Statement
For the Year Ended March 31, 20Y9
Sales $
Cost of goods sold
Gross profit $
Expenses:
Selling expenses $
Administrative expenses
Total expenses
Operating income $
Other expense:
Interest expense
Net income $

2.

Beginning inventory, purchases, and sales for an inventory item are as follows:

Sep. 1 Beginning Inventory 24 units @ $21
5 Sale 14 units
17 Purchase 26 units @ $23
30 Sale 27 units

Assuming a perpetual inventory system and the first-in, first-out method:

a. Determine the cost of the goods sold for the September 30 sale.
$

b. Determine the inventory on September 30.
$

3.

Asset turnover ratio

Financial statement data for years ended December 31, 20Y3 and 20Y2, for Edison Company follow:

20Y3 20Y2
Sales $1,749,000 $1,512,000
Total assets:
  Beginning of year 770,000 670,000
  End of year 820,000 770,000
a. Determine the asset turnover ratio for 20Y3 and 20Y2. Round answers to one decimal place.
20Y3 20Y2
Asset turnover
b. Is the change in the asset turnover ratio from 20Y2 to 20Y3 favorable or unfavorable?

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