The following selected accounts and their current balances appear in the ledger of Sombrero Co. for the fiscal year ended November 30, 2006:
|
Cash
|
$ 91,800
|
Sales
|
$1,802,400
|
|
Accounts Receivable
|
74,400
|
Sales Returns and Allowances
|
25,200
|
|
Merchandise Inventory
|
120,000
|
Sales Discounts
|
13,200
|
|
Office Supplies
|
3,120
|
Cost of Merchandise Sold
|
1,284,000
|
|
Prepaid Insurance
|
8,160
|
Sales Salaries Expense
|
252,000
|
|
Office Equipment
|
76,800
|
Advertising Expense
|
33,960
|
|
Accumulated Depreciation-
|
|
Depreciation Expense-
|
|
|
Office Equipment
|
12,960
|
Store Equipment
|
5,520
|
|
Store Equipment
|
141,000
|
Miscellaneous Selling Expense
|
1,320
|
|
Accumulated Depreciation-
|
|
Office Salaries Expense
|
49,200
|
|
Store Equipment
|
58,320
|
Rent Expense
|
26,580
|
|
Accounts Payable
|
32,400
|
Insurance Expense
|
15,300
|
|
Salaries Payable
|
2,400
|
Depreciation Expense-
|
|
|
Note Payable
|
|
Office Equipment
|
10,800
|
|
(final payment due 2016)
|
36,000
|
Office Supplies Expense
|
1,080
|
|
Capital Stock
|
60,000
|
Miscellaneous Administrative
|
|
|
Retained Earnings
|
261,600
|
Expense
|
1,440
|
|
Dividends
|
30,000
|
Interest Expense
|
1,200
|
Instructions
1. Prepare a multiple-step income statement.
2. Prepare a retained earnings statement.
3. Prepare a report form of balance sheet, assuming that the current portion of the note payable is $3,000.
4. Briefly explain how multiple-step and single-step income statements differ.