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ACC 290 Week 3 Problem 5-5A (Simon Company) LATEST

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ACC 290 Week 3 Problem 5-5A (Simon Company) NEW

Purpose of Assignment 
The purpose of this assignment is to help you become familiar with the parts of the multiple‐step income statement.
Assignment Steps 
Resources: Financial Accounting: Tools for Business Decision Making
Scenario: An inexperienced accountant prepared this condensed income statement for Simon Company a retail firm that has been in business for a number of years.
SIMON COMPANY
Income Statement
For the Year Ended December 31, 2017
 
Revenues
 
Net sales
$850,000
Other revenues
22,000
 
872,000
Cost of goods sold
555,000
Gross profit
317,000
Operating expenses
 
Selling expenses
109,000
Administrative expenses
103,000
 
212,000
Net earnings
$105,000
As an experienced, knowledgeable accountant, you review the statement and determine the following facts:
1.      Net sales consist of: sales $911,000, less freight-out on merchandise sold $33,000, an d sales returns and allowances $28,000.
2.      Other revenues consist of sales discounts $18,000 and rent revenue $4,000.
3.      Selling expenses consist of salespersons’ salaries $80,000, depreciation on equipment $10,000, advertising $13,000, and sales commissions $6,000.  The commissions represent commissions paid. At December 21, $3,000 of commissions have been earned by salespersons but have not been paid.  All compensation should be recorded as Salaries and Wages Expense.
4.      Administrative expenses consist of office salaries $17,000, dividends $18,000, utilities $12,000, interest expense $2,000, and rent expense $24,000, which includes prepayments totaling $6,000 for the first quarter of 2018.
Assume a 25% tax rate. 
Prepare a detailed multi-step income statement with a brief explanation of 700 words. Assume a 25% tax rate.
 
Show your work on the Excel® spreadsheet and submit with your explanation.

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